In Victoria, landholder duty provisions (Duties Act (Vic) 2000) see the imposition of duty on anybody who acquires interest in a ‘landholder’ that holds over $1 million worth of land interests in Victoria. Persons acquiring interests in the landholder, or entering into arrangements for an economic entitlement with the landholders, should be aware that they may be subject to duty. There is a duty to notify the State Revenue Office within 30 days of relevant acquisitions.
What is a Landholder?
Only acquisitions in certain landholders that have land holdings in Victoria with an unencumbered value of $1 million or more will be charged duty.
Landholders are defined by the act as:
companies or unit trust schemes;
that have land holdings in Victoria with an unencumbered value of $1 million or more.
The company or trust scheme can be either private or public. Acquisitions in the above landholders will attract the duty.
What is a relevant acquisition?
A person makes a relevant acquisition in a landholder if the person acquires an interest in the landholder that:
1) is a significant interest
for private unit trust schemes - an interest of 20% or more
for a private company or wholesale unit trust scheme - an interest of 50% or more
for listed company or public unit trust scheme - an interest of 90% or more;
2) is a further interest
this is any interest acquired after a significant interest is acquired in any of the above landholders; or
3) is a relevant acquisition of a private landholder
this is when a person, either alone or together with an associated person, acquires (directly or indirectly) within a three-year period an economic entitlement that amounts to an interest of 50% or more; and
the economic entitlement or arrangement allows them to do all or any of the following
- To participate in the dividends or income of the private landholder
- To receive any amount determined by reference to the dividends or income of the private landholder
- To acquire any entitlement described above.
4) Is a relevant acquisition on the conversion of private unit trust scheme , wholesale unit trust scheme or private company
This is when under an agreement or arrangement, a landholder that is a private unit trust scheme, a wholesale unit trust scheme or private company becomes, through whatever means, a public unit trust scheme or a listed company
Acquisitions of interest in the private unit trust scheme, wholesale unit trust scheme or private company under the agreement or arrangement are deemed to be a single acquisition of 100% in the public unit trust scheme or listed company. The acquisition is taken to have been made on the day the conversion took place.
What is an interest in a landholder?
An interests in a landholder can be acquired by any means, including:
· redemption or surrender of a unit or share,
· the abrogation or alteration of rights pertaining to a unit or share,
· the payment of an amount owing on a unit or share, and
· a change in the beneficial ownership of a unit or share.
You also have an interest in a landholder if you have an entitlement to distribution of the property on the winding up of a landholder.
Exemptions and concessions
In some circumstances, acquisition of interest in a landholder are exempt from duty.
Acquisitions are exempt where an exemption under Chapter 2 of the Duties Act 2000 would have been available if the acquisition had been a direct transfer of land.
Additionally, exemptions may be available if the acquisitions are made by:
· Receivers or trustees in bankruptcy.
· Liquidators or executors/administrators of a deceased estate.
· A compromise or arrangement with a company’s creditors.
· A pro rata increase in the interests of all unit holders or shareholders.
Concessions from landholder duty apply for:
· The interest in the landholder was due to the providing of finance and the Commissioner is satisfied the acquisition is effected solely for that purpose. The acquisition will not be charged duty, provided that the interest is re-transferred by the person making the acquisition within five years.
· If the Commissioner is satisfied that the application of the landholder provisions results in an anomalous duty outcome, the duty may be reduced to an amount not less than the duty that would be payable, had the subject of the relevant acquisition been a transfer of the land of the landholder to the person.
Obligation to report relevant acquisitions
The person(s) who made the relevant acquisition and the landholder must prepare and lodge an Acquisition Statement with the Commissioner within 30 days after the date of the relevant acquisition.
Duty must also be paid within 30 days after the date of the relevant acquisition or a tax default will occur for the purposes of the Taxation Administration Act 1997.
Failure to lodge a statement on time can result in penalties.
How much duty is charged?
Landholder duty is generally charged at the same rates that apply to land transfers under Chapter 2 of the Act. For acquisitions entered into on or after 1 July 2021:
For acquisitions before 1 July 2021, please visit the SRO here for previous rates.
However, depending on the type of the landholder, duty may be calculate by different methods. For more detail on specific landholders, please visit the SRO here.
Further help and information
If you require assistance with your matter, please contact our Property and Commercial team at Longton Legal.
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*
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