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Land rich taxation – Duties Act 2000 (Victoria)

The Victorian Duties Act (2000) imposes duty on any purchase of an interest in a “land rich entity.”

There are wide “constructive ownership” rules that establish when an entity is land rich and the amount of duty, which is payable upon the acquisition of an interest in such an entity.

Land-rich duty seeks to circumvent avoidance of duty by parties transferring interests in land-rich entities, such as unlisted companies and unit trusts instead of transferring the land itself and paying the appropriate duty.  


Land Rich Duty applies to transfer of shares in a private company or interests in a private trust (usually a fixed trust) if the entity is a “Land Rich Entity,” which must have:

  • Landholdings in Victoria with an unencumbered value of $1 million or more (“threshold test”), and
  • The unencumbered value of its landholdings anywhere is 60% or more of the total unencumbered value of all of its property (“land to asset ratio test”).
  • In addition to landholdings held by the entity in its own right, for the purposes of both the threshold test and the land to asset ratio test, a landholder (i.e. the entity) is the owner:
  • A proportion of the property held by any “linked entities”, which are entities for which the landholder is entitled to receive at least 20% of the land and other property of the entity if all the links in the chain were wound up;
  • The property the subject of any uncompleted contracts of sale (whether for the purchase or sale of the property by the landholder), and
  • The whole property that is subject to any discretionary trusts in which the landholder is a capital beneficiary.


Victoria replaced the Land Rich Duty provisions with a Landholder Duty Model on 1 July 2012.

The transition from a land rich to a landholder duty removes the land rich ratio test that currently needs to be satisfied for the land rich duty provisions to apply to an acquisition of an interest in a company or trust. In addition, the landholder model includes listed companies and listed unit trust schemes as taxable entities.  


The new Landholder Duty Model will:

  • Affect more entities by the duty base;
  • Simplify stamp duty issues for unit transactions in property trusts;
  • Result in an alignment or uniformity with other states and territories, and
  • Attract landholder duty to takeovers of any listed entities that own Victorian landholdings.


Different acquisition thresholds apply for taxable landholding entities before being liable to duty liability. The following thresholds apply:

  • Unlisted unit trusts schemes (excluding wholesale trusts) 20% or more;
  • Unlisted companies and wholesale unit trust schemes 50% or more, and
  • Listed companies and unit trust schemes 90% or more.


Under the current land rich provisions, interest means an entitlement to a distribution of property on a winding up of the landholder.

Under the landholder duty model, the interest will be the greater of a percentage:

  • A person is entitled to participate in a distribution of the property of the landholder on a winding up;
  • Of votes that a person is entitled to exercise at a general meeting of shareholders or unit holders, and
  • Representing the extent to which a person is entitled to the economic interest of the landholder (including dividends or distribution of income)


In Victoria, the changes will affect purchasers of an entity or who acquire an interest in an entity, owning land valued above the $1 million threshold.

Purchasers of shares in a company or interest in a private trust scheme, which owns land, must consider additional compliance costs, transaction costs and due diligence. These changes will affect re-structuring and asset protection programs and serious consideration to immediate action is advisable.  


Behan Legal advises and assists on these important issues. We suggest that, you call 03 9646 0344 to make an appointment to evaluate whether you need to take any immediate action.

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