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Exemption - transfers to and from a trustee or nominee


This matter concerned the assessment to duty of the transfer of land at Pakenham from two brothers to MD Commercial Pty Ltd and AJ Commercial Pty Ltd (Trustees) respectively, as trustees of separate trusts. 

Each trust was established by a deed which provided that the beneficiary in each case was the relevant brother. It also provided that the deed could not be varied to confer any share or benefit on any person other than the beneficiary. Apart from that, the Trustee was empowered to develop, subdivide and sell the property to third parties at the direction or written consent of the beneficiary. There was no dispute that the property was subsequently developed, subdivided and parts of it sold by the Trustees.

The issue was whether or not the exemption in s35 of the Duties Act applied to exempt the original transfers from the brothers to the Trustees. At first instance, and on appeal, VCAT and the Supreme Court held in favour of the Commissioner. The taxpayer subsequently sought leave to appeal to the Court of Appeal.


On 13 December 2019, the Court of Appeal decided the matter in favour of the taxpayers. Broadly, their Honours drew a distinction between transfers to trustees where there are present obligations to develop, subdivide and sell the property on the one hand, and transfers where such obligations are made subject to the direction of beneficiaries on the other. 

There was no dispute that the first category of transfers fell outside the scope of the exemption in s35 of the Duties Act. But their Honours concluded that the second category of transfers, which encompassed the transfers in this matter, could qualify for the exemption in s35.

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