Landholder Duty

The landholder provisions commenced on 1 July 2009 to charge duty on certain acquisitions of interests in landholders at the same rate as for a transfer of land.

A landholder includes any of the following:

  • a unit trust scheme
  • a listed company
  • a private company.

These terms are defined in the dictionary of the Duties Act 1997.

The provisions apply where a landholder has land holdings in NSW with a threshold value of $2 million or more. The threshold value is the total value of all land holdings in New South Wales of the unit trust scheme or company as registered by the Valuer-General as at 1 July in the previous year.

For any land holding for which a value cannot be obtained under the above provisions, the value of the land holding is the unencumbered value of the land holding.

Once a liability arises, duty will be calculated with reference to the unencumbered value of the land holdings in NSW. Duty will also be payable on the relevant portion of the unencumbered value of the goods of the landholder. An Acquisition Statement must be lodged for each acquisition. To download the relevant forms, see Forms and factsheets.

Private landholders

A private landholder is:

  • a private unit trust scheme
  • a private company.

These terms are defined in the dictionary of the Duties Act 1997.

Tracing of property – linked entity

The property of any linked entity is deemed to be the property of the landholder.

A linked entity of a private unit trust scheme or private company (a principal entity) means an entity that is part of a chain of entities:

  • which includes the principal entity; and

  • is comprised of one or more links; and

  • in which one or both of the following apply:

    • at each link between 2 entities in the chain—one of the entities would be entitled, in the event of a distribution of all the property of the other entity (and without regard to any liabilities of any entity in the chain), to receive not less than 50% of the value of the property of the other entity,

    • in the event of the distribution of all of the property of entities in the chain (except for the principal entity)—the principal entity would be entitled (without regard to any liabilities of any entity in the chain) to receive not less than 50% of the value of that property.

The value of the interest held via a linked entity is that portion of the unencumbered value of property the unit trust scheme or private company would be entitled to if each entity in the chain was wound up.

When does a liability arise?

A liability arises when a person makes a relevant acquisition and a person makes a relevant acquisition if the person acquires a significant interest.

A person has a significant interest in a private landholder if the person, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, would be entitled to 50% or more of the property distributed.

A person has an interest in a landholder if the person, in the event of a distribution of all the property of the landholder, would be entitled to any of the property distributed.

A person makes a relevant acquisition if the person:

  1. acquires an interest in a landholder:

    1. that is of itself a significant interest in the landholder

    2. that, when aggregated with other interests in the landholder held by the person or an associated person, results in an aggregation that amounts to a significant interest in the landholder

    3. has a significant interest, or an interest described in paragraph (a)(ii) above, in a landholder, and acquires a further interest in the landholder.

  2. acquires an interest in a landholder that (when aggregated with other interests in the landholder acquired by the person or other persons under acquisitions that form or give effect to substantially one arrangement between the acquirers) results in an aggregation that amounts to a significant interest in the landholder.

Note: an entitlement that arises merely because a person has a debt interest (within the meaning of Division 974 of the Income Tax Assessment Act 1997) in a landholder is not an interest in a landholder.

Acquiring an interest

A person acquires an interest in a landholder if the person obtains an interest, or the person’s interest increases, in the landholder regardless of how it is obtained or increased (for example, by a purchase of shares or units).

A change in the capacity in which a person holds an interest in a landholder is regarded as an acquisition of an interest in the landholder. For example, if a person who holds a share or unit in a landholder declares a trust in respect of the share or unit.

If an interest in a landholder is acquired or held by a person as bare trustee for another person, the interest is taken to have been acquired by, or to be held by, the ultimate beneficial owner of the interest. The ultimate beneficial owner of an interest is a beneficial owner of an interest who does not hold the interest as bare trustee for another person (so that, if there is a chain of bare trustees, the ultimate beneficial owner is the last beneficial owner in that chain).

How is duty calculated?

  1. Where an acquisition statement does not disclose any acquisitions during the three years preceding the relevant acquisition

    Duty is chargeable at the transfer of land rate (1.25 – 5.5%) on the amount calculated by multiplying the unencumbered value of all land holdings and goods of the landholder in NSW (calculated at the date of acquisition of the interest acquired) by the proportion of that value represented by the interest acquired in the relevant acquisition.

  2. Where an acquisition statement discloses one or more acquisitions during the 3 years preceding the relevant acquisition, (including any interests acquired by associated persons on the same date)

    Duty is chargeable at the transfer of land rate on the aggregate of the amounts severally calculated using the method described above for each interest required to be disclosed in the statement.

Credit to prevent double duty

To prevent the payment of double duty in respect of a relevant acquisition, the duty payable on the acquisition statement will be reduced by:

  • any duty paid previously in respect of any earlier acquisition which must be disclosed on the current statement

  • a proportion of the duty payable on the share or unit transfer.

Note: See Section 155 of the Duties Act 1997 for more information.

Surcharge Duty may apply from 21 June 2016 on relevant acquisitions made by foreign persons in a landholder owning NSW residential land holding. More information.

When must duty be paid?

You must pay duty within 3 months after the liability to pay the duty arises.

Who is responsible for paying duty?

Duty is payable by a person who makes a relevant acquisition in a landholder.

If a relevant acquisition results from an aggregation of the interests of associated persons, the person who made the relevant acquisition and the associated person or persons are jointly and severally liable for payment of the duty.

The term 'associated person' is defined in the dictionary of the Duties Act 1997.

What evidence of value is required?

Once a liability arises, you must lodge a formal valuation or any other document the Chief Commissioner considers to be appropriate which reflects the unencumbered value of the land holdings and non-exempt goods of the landholder as at the acquisition date that was disclosed in the Acquisition Statement.

Please refer to Revenue Ruling DUT 012 (Dutiable Transactions – Evidence of Value), DUT 044 (Valuation of Property – Suitably Qualified Person) and DUT 045 (Market Value and GST).

What goods are not included?

For landholder duty ‘goods’ does not include:

  • goods that are stock in trade
  • materials held for use in manufacture
  • goods under manufacture
  • goods held or used in connection with land used for primary production
  • livestock
  • a registered motor vehicle
  • a ship or vessel.

What acquisitions are exempt?

Exempt acquisitions include:

  • Corporate reconstructions – Certain acquisitions as part of corporate reconstruction transactions are exempt from duty (see Revenue Ruling DUT 026).

  • Relationship breakdown – Certain acquisitions following the breakdown of a marriage or defacto relationship are exempt from duty.

  • Deceased estates – An acquisition is exempt if the interest acquired is solely as the result of the distribution of the estate of a deceased person.

For information on other exemptions, please refer to Part 4 (Exemptions and Concessions) of the Duties Act 1997.

Note: interests acquired under exempt acquisitions are counted as 'interests' for the purpose of determining whether a person has a significant interest.

Public landholders

Public landholders are:

  • listed company
  • public unit trust scheme.

These terms are defined in the dictionary of the Duties Act 1997.

When does a liability arise?

A person has a significant interest in a public landholder if, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, the person would be entitled to 90% or more of the property distributed.

An acquisition of a significant interest will be chargeable with duty if an acquisition is made in the public landholder on or after 1 October 2009. Acquisitions in public landholders made before 1 July 2009 are exempt from duty.

How is duty calculated?

Duty on the acquisition of a significant interest in a public landholder will be charged at the concessional rate being 10% of the rate that would be charged on a transfer of all the landholdings and goods of the public landholder.

Primary producers – special provisions

A primary producer is a landholder whose land holdings wholly or predominantly comprise land used for primary production, as defined in section 274 of the Duties Act 1997.

A primary producer is considered ‘land rich’ if:

  • it has land holdings in New South Wales with an unencumbered value of $2,000,000 or more, and

  • its land holdings in all places, whether within or outside Australia, comprise 80% or more of the unencumbered value of all its property

Duty is chargeable in respect of an acquisition of an interest in a primary producer only if, when the acquisition is made, the primary producer is land rich.

Note: If, at any time within 5 years of the acquisition, the landholder ceases to be a primary producer, you must notify the Chief Commissioner. You will then be assessed for duty on your acquisition, with duty chargeable on the date when the landholder ceased to be a primary producer.

For more information on landholder duty, contact us.

Phone
1300 139 814*
8.30am - 5.00pm Monday to Friday
Email

Last updated: 20 July 2017