Victoria Duty Alert: Further Clarification Of Economic Entitlement Rules

As foreshadowed in our Tax Note regarding the administration of the economic entitlement provisions in Part 4B of Chapter 2 of the Duties Act 2000 (Vic) (Act), the Victorian State Revenue Office (SRO) on 25 November 2025 has issued Ruling DA-067 (Ruling) which further clarifies the application of these provisions. Overall, the application of these provisions has broadened, and greater technical nuances have been introduced. Expert advice should be obtained early in the transaction process, including whether it may be appropriate to obtain a private ruling.

Overview of economic entitlement provisions

The Victorian economic entitlement provisions are specific anti-avoidance rules intended to impose duty on transactions which confer economically equivalent benefits to land ownership. Relevantly, the provisions apply where a person enters an arrangement entitling them to participate in or receive an amount determined by reference to the income, rent or profit derived from land, the capital growth of land, or the sale proceeds from land (and there is otherwise no dutiable transaction).

Ruling DA-067 is intended to be read in conjunction with DA-065 and DA-066, which deal with service fees and the calculation of economic entitlements respectively.

Application of transitional relief

Arrangements made before 19 June 2019 are generally not subject to economic entitlement provisions. However, where an amendment is made to the arrangement after that date, transitional relief may not apply. In particular, relief will not apply where an amendment results in the acquisition of a new economic entitlement, or a substantial change to the pre-existing entitlement beyond what was contemplated in contemporaneous documents evidencing the arrangement (e.g. introducing new persons to acquire the economic entitlement, substituting land, or a substantial change in the percentage of entitlement). Transitional relief also does not apply where the economic entitlements under a pre-19 June 2019 arrangement are assigned or novated after that date.

Meaning of an 'arrangement'

This Ruling clarifies that arrangements:

• include the assignment or transfer of existing economic entitlements between parties who do not own the land;
• are not limited to arrangements in relation to a single parcel of land. Arrangements in relation to multiple parcels of land where the aggregate unencumbered value exceeds $1 million are captured under the provisions; and
• if made after 19 June 2019, must involve at least one legally enforceable instrument under which a person acquires an economic entitlement. Non-binding expressions of intent or documents that merely record commercial intentions, such as indicative offers or heads of agreement, are not captured under this regime.

Timing and nature of economic entitlements

Economic entitlement provisions apply to any arrangement that confers a present or future entitlement to an economic benefit from land, including where the payment, timing, or calculation of the benefit is dependent on the satisfaction of a condition or future event.

Where an arrangement is made between a financier and a purchaser in anticipation of the purchaser acquiring an interest in land, the entitlement begins to exist when the purchaser has acquired its interest in the land, whereupon duty on the entitlement is determined by reference to the dutiable value of the land at the time of acquisition.

However, an instrument that merely grants a right to negotiate or enter into a future agreement to acquire a benefit, or a bare call option limited to the purchase of land, does not constitute an economic entitlement.

Acquisition of an entitlement through another person

Whilst an economic entitlement may be acquired directly under an arrangement or indirectly through another party, it is immaterial whether the person who obtains the benefit of an economic entitlement is a party to the arrangement. A person may acquire an economic entitlement even if the economic entitlement is acquired by an intermediary (for example, a trustee or custodian), or a third party (either nominated by the parties or explicitly specified in the arrangement).

Participation in the economic benefits from the land

In this context, the phrase 'to participate in' means an entitlement to share in one or more of those economic benefits from land. It does not require active involvement in generating the benefits. The application of a different label to the benefit, such as an 'uplift' or 'interest', is immaterial – rather, the focus is on the substance of the arrangement and whether the amount is, on an objective basis, determined by reference to one or more economic benefits from land.

Acquisitions of shares and units

The economic entitlement provisions do not apply to the acquisition of shares or units in a company or unit trust where shares or units only confer rights to general income determined by reference to the landholder's assets as a whole. Conversely, where the governing document of a landholder (or another binding instrument) confers legally enforceable rights to participate in, or receive an amount by reference to economic benefits to specific land, the economic entitlement provisions can apply.

Foreign purchaser additional duty

The SRO has also clarified that an economic entitlement will be treated as a land-related interest under the Act, and therefore foreign purchaser additional duty is applicable if the relevant land is residential property and the acquirer is a foreign person.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.