Australia: Victorian Landholder Duty - proposed model released for consultation

Last Updated: 16 September 2011
Article by John Loxton

Following in the footsteps of most other States and Territories in Australia, Victoria announced in the 2011-2012 State Budget that it intended to adopt in its Duties Act a landholder duty model in place of the landrich regime. On 12 September 2011, the first details of the proposed model were released through a Consultation Paper available at the State Revenue Office's website

This Paper reveals an intention to adopt a landholder model which is different in some significant respects to that adopted in other States and Territories. Disappointingly, there is to be a broadening of the tax base without the quid pro quo of a relaxation of the duty thresholds.

The proposed new regime is to commence on 1 July 2012.

At this stage, there is no draft legislation and the Victorian State Revenue Office is seeking written submissions by 5 pm Friday 30 September 2011 regarding the features of the proposed model.

Key provisions

The key points of the proposed model are set out below:

  • The most important change to the rules relating to acquisitions of interests in land-owning entities is that the 60% landrich test will be removed.
  • All that will be required for landholder duty to become relevant is an acquisition of a significant interest in an entity that has Victorian "landholdings" with an unencumbered value of at least $1 million. This substantially broadens the tax base as many companies and trusts which would not consider themselves as being in the property industry could be caught. One would have expected that as one quid pro quo for removing the 60% threshold, the $1 million land value threshold would have been increased to $2 million improved value. Adopting a $2 million improved value threshold would be seen as a positive step towards harmonising the stamp duty laws across Victoria and New South Wales.
  • Duty will be calculated on the unencumbered value of all landholdings and fixtures directly or indirectly held (through a 20% rather than 50% tracing provision – applicable to all landholders) as at the date of the relevant acquisition. Again this is inconsistent with most other States and Territories. It has the effect of requiring investigation of entities which are not subsidiaries of the entity in question.
  • There will be a new definition of "fixtures" with the aim of taxing anything which is attached to land, regardless of whether it would be a "fixture" under common law. This proposed change will leave little scope to argue that a particular piece of plant and equipment is not a "fixture" and therefore should be excluded from the value of land. It also means that ownership is not the deciding factor. Duty could be paid by reference to assets owned by a third party such as a tenant. For this reason, it is surprising that Victoria has chosen to include a broad definition of "fixtures" rather than to adopt the New South Wales, South Australia and Western Australian approach of levying duty on the value of land and any chattels owned by the landholder (regardless of whether the chattels are affixed to the land or not).
  • The proposed landholder duty will apply to private entities, wholesale unit trusts and also to listed entities. The exemption for public unit trust schemes (such as widely held but not listed unit trusts) is under review.
  • The acquisition thresholds under the existing landrich duty regime have been maintained so that landholder duty will be triggered upon the acquisition of:
    • a 20% or greater interest in a private unit trust. ACT is the only other jurisdiction which has a 20% acquisition threshold for landholder duty and it has this threshold for historical reasons. All other jurisdictions (other than Queensland which has an entirely different taxing regime for private unit trusts) have a 50% threshold;
    • a 50% or greater interest in private companies and wholesale unit trust schemes (this remains the same as under the existing landrich duty provisions); and
    • a 90% or greater interest in listed landholders (listed entities are presently not subject to landrich duty).
  • Similar to New South Wales, duty on listed landholder acquisitions will be calculated on only 10% of the general rate of transfer duty.
  • Under the existing landrich duty regime, a person has an "interest" in a landrich landholder if the person has an entitlement to a distribution of property on a winding up of the landholder. Under the proposed landholder model, there is a new broader concept of "interest" which adopts a three-pronged approach. "Interest" will be the greater of the following direct and indirect entitlements:
    • a percentage representing the extent to which a person would be entitled to participate in a distribution of property of the landholder on a winding up;
    • a percentage representing the proportion of votes that a person would be entitled to exercise (or control) at a general meeting of shareholders or unitholders assuming that they all exercise their voting rights; and
    • a percentage representing the extent to which a person is entitled to the economic interests of the landholder, including dividends or distributions of income.

This three-pronged concept of "interest" means that persons who are not shareholders or unitholders may acquire an interest for landholder duty purposes and may become liable for landholder duty if, for example, they become entitled to distributions of income under a commercial arrangement such as under a joint venture agreement.

Additionally, despite their ambiguity, the provisions relating to how an interest may be acquired through a change of control are being retained.

  • The existing discretion allowing for "just and reasonable" relief will be dropped. In New South Wales, this allows the Commissioner to have a free hand to reduce liability to duty where the Act has unintended consequences (eg. double duty situations).
  • The rules relating to quarantining will change so that all interests held in a landholder will be taken into account in working out whether a significant interest in a landholder has been acquired. However, it is proposed that duty will only be payable on interests acquired within a three year period.

Some further comments

The proposed Victorian landholder duty model can be seen as a significant broadening of the current landrich duty base. In particular, it is disappointing to see that despite removing the 60% test, the minimum acquisition threshold for the duty to apply was not increased to 50%, thereby bringing the Victorian provisions in line with New South Wales and other jurisdictions.

This increase to a 50% threshold was seen in other States such as New South Wales as the quid pro quo for removing the 60% test and imposing duty on acquisitions of interests in listed entities. It also enabled the Duties Act to be simplified by removal of the separate 50% threshold for wholesale unit trusts. The net effect of the introduction of the model is that, all other things being equal, it should raise more revenue.

Next steps

The Victorian State Revenue Office has invited public comments and submissions on the Consultation Paper and we encourage clients to write to the Policy & Legislation Branch requesting that the proposed Victorian landholder duty model be aligned with New South Wales in terms at least of having a 50% threshold acquisition test for private unit trusts, a 50% linked entity tracing test and the same treatment of fixtures. The broad principle of harmonisation of stamp duties laws between States and Territories, which drove the stamp duty rewrites of the 1990s, demands nothing less.

You might also be interested in...

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.