Landholder duty: the forgotten tax
Stamp duty on an acquisition of land is something a purchaser typically remembers to factor in. However, land stamp duty has another, oft-forgotten, cousin – landholder duty.
Landholder duty is payable if:
- You acquire certain interests such as shares in a company or units in a unit trust; and
- That company or unit trust owns land in Victoria, valued at $1 million or more.
Significant interests = Significant costs
Company Shares
You will acquire an interest in a company that triggers landholder duty if your interest will be more than 20%.
Unit Trust units
The threshold for unit trusts is slightly higher than that of shares in a company. An acquisition of more than 50% in a unit trust will trigger landholder duty.
Landholder duty will be chargeable on the acquisition at the usual rate of stamp duty – as though you were acquiring the land directly. An interest is deemed to be acquired by way of a purchase, gift, cancellation or issue, redemption or surrender or other changes to the beneficial owner or rights attached to shares or units.
Further interests = Further Duty
Once landholder duty provisions are triggered following an acquisition of a “significant interest”, as outlined above, any further interests acquired in that company or unit trust, even if they are less than the required percentage, will also attract landholder duty.
Similarly, if related parties or entities are acquiring interests in the company or unit trust (even if it is not at the same time), even where an individual party has not acquired an interest meeting the threshold, the landholder duty provisions are likely to be triggered as their percentages will be “grouped” and will accumulate accordingly.
What can I do to deal with landholder duty?
Before any unit or share interests are created, transferred, issued or cancelled, you should:
- Seek legal advice as to whether or not landholder provisions would be triggered;
- Confirm if any exemptions are available, such as the family farm exemption;
- Reach out to your accountant for accounting advice before amending or affecting any interest in your unit trust or company trust;
- Ensure a submission for a landholder duty assessment is made on time and complies with the State Revenue Office requirements. The State Revenue Office has a lengthy period after acquisition to open an audit. Failure to pay landholder duty when due (or to comply with submission timelines) may make you liable for penalties and interest; and
- Consider the future of a unit trust or company intended to hold land in Victoria given the obligations for landholder duty are ongoing even after acquisition of the land itself.
Author: Rhylee Hanrahan
Published: 16 January 2025