Landholder duty

You may be liable for landholder duty when you acquire shares or units in a company or unit trust which owns land (‘landholder’).

A landholder is a unit trust scheme or a private or a publicly listed company that holds land (‘landholdings’) in NSW with an unencumbered value of $2 million or more.

A landholding is an interest in land other than the estate or interest of a mortgagee, charge or other secured creditor.

An interest in land includes an interest in anything fixed to the land regardless of whether such items are considered fixtures at common law. (link to CPN)

A liability for landholder duty arises when you make a ‘relevant acquisition’.

The following persons are jointly and severally liable to pay landholder duty:

1. The person who makes the relevant acquisition
2. The landholder or the trustee of the landholder
3. If the acquisition results from an aggregation of the interests, each of those other persons

Any liability to pay duty, interest or penalty tax is a charge on the land holdings of the landholder or trustee.

A relevant acquisition occurs when you acquire an interest that:

• is a ‘significant interest’
• when aggregated with other interests held by you or an associated person amounts to a significant interest
• is a significant interest, and a further interest is acquired
• when all interests that are essentially one arrangement between multiple acquirers are aggregated, form a significant interest.

A significant interest means, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, you are entitled to:

• 50% or more of the property in a ‘private landholder’, or
• 90% or more of the property in a ‘public landholder’.

Acquiring a significant interest does not have to occur in one event. For instance, if you already hold a 45% interest in a landholder and then acquire another 5%, you may be liable to pay landholder duty.

You can acquire an interest in a landholder in various ways, including:

• the purchase, gift or issue of a unit or share
• the cancellation, redemption or surrender of a unit or share
• the removal, cancellation or alteration of a right for a unit or share
• the capacity in which you hold an interest in the landholder changes, e.g. from a trust to an individual.

Lodge an acquisition statement

If you’ve made a relevant acquisition in a landholder, you need to lodge an Acquisition Statement within three months of your acquisition. Where landholder duty is payable, complete and lodge the appropriate form.

• For private landholders: Acquisition Statement: acquisition of an interest in a private landholder (ODA043A) (PDF, 489 KB)
• For public landholders: Acquisition Statement: acquisition of an interest in a public landholder (ODA 043B) (PDF, 356 KB)

If you make a relevant acquisition as a result of the combined interests of other persons or companies, which are related or associated to you, each person or company must complete their own acquisition statement.

Each form gives you information on the supporting documents you will need to submit.

Calculating landholder duty

Landholder duty is charged at the same rate as transfer duty and is calculated on the unencumbered value of the landholdings and goods of the landholder. However, there is a specific provision for certain goods that are excluded from the calculation.

• Unencumbered value is the value of the property determined without regard to any encumbrance (ie. mortgage) on the property.
• Duty is calculated on the number of acquisitions made in a ‘statement period’.
• A statement period is the period commencing 3 years before the date of the relevant acquisition and ending on the date of the relevant acquisition.

A different formula is then applied to this amount for private and public landholders.

Linked entities

Companies and unit trusts can hold land and property in their own right, or they can hold an interest via linked entities.

A linked entity is a chain of entities – such as companies, unit trusts or partnerships – that are each entitled to the others’ property if it is distributed.

For linked entities, either one or both of the following apply.

• At each link between two entities, one would receive at least 50% of the value of the other’s property if it is distributed.
• If all of the entities’ property other than the principal’s were to be distributed, the principal entity would be entitled to at least 50% (for private landholders only).

The value of a linked entity’s interest is the portion of unencumbered value the company or unit trust would be entitled to if each entity was wound up.

Where the landholder is the beneficiary of a discretionary trust, any land or property it owns are considered to be interests of the landholder.

Surcharge Purchaser Duty

If you are a foreign person, and you have made a relevant acquisition in an landholder that has an interest in residential land, you may also need to pay Surcharge Duty in addition to landholder duty.

Make a payment

Duty must be paid within three months of the acquisition.

The following persons are jointly and severally liable to pay landholder duty:

1. The person who makes the relevant acquisition
2. The landholder or the trustee of the landholder
3. If the acquisition results from an aggregation of the interests, each of those other persons

Where an interest in a landholder is acquired or held by a bare trustee for another person, the interest is taken to have been acquired by the ultimate beneficial owner.

The ultimate beneficial owner must pay the duty on a relevant acquisition made as a result of combining all interests held by the ultimate beneficial owner or associated person.

Failure to pay duty on time will result in the imposition of interest. Penalty tax may also be applied.