A relevant acquisition is generally charged with duty at the same rates applying to land transfers under Chapter 2 of the Duties Act 2000 (the Act).
Different calculation methods and concessions apply depending on the nature of the landholder, the relevant acquisition and the value of the land holdings. One such concession is the phasing-in duty formula in s89 of the Act which applies when the value of a landholder’s land holdings in Victoria is between $1 million and $2 million. For more details on valuation of land holdings, please refer to Revenue Ruling DA-060v2 - Landholder provisions - valuation of land holdings.
Where the landholder’s land holdings include properties that have entered the commercial and industrial property tax reform, those properties may be wholly or partly excluded from the calculation of duty.
In certain cases, the Commissioner may also provide a concession on the calculation of duty on a relevant acquisition in a landholder which owns, or is deemed to own, certain leasehold land, fixtures and/or primary production land.
Private landholders
The same rates of duty applying to land transfers under the Act apply to relevant acquisitions in private landholders, being a private company, private unit trust scheme or wholesale unit trust scheme. However, a different method of calculation applies depending on whether the relevant acquisition in the private landholder is the result of:
- the acquisition of a single interest or aggregated interests on the same day
- aggregated interests over time
- a further interest.
Single interest or aggregated interests on the same day
When a relevant acquisition in a private landholder results from an acquisition that is of itself a significant interest, or the acquisition of interests on the same day that aggregate to a significant interest, duty is charged on the amount calculated by multiplying the unencumbered value of all land holdings of the landholder in Victoria at the date of acquisition by the percentage interest acquired as a result of the relevant acquisition.
For example, the duty payable on a relevant acquisition made when a person acquires a 70% interest in a private landholder which has $10 million in Victorian land holdings is calculated as follows.
- Value of landholder's Victorian land holdings: $10 million
- Interest acquired: 70%
- Dutiable value ($10 million × 70%): $7 million
- Relevant rate of duty: $110,000 plus 6.5% of amount in excess of $2 million
- Duty payable on relevant acquisition ($110,000 + (6.5% × $5 million): $435,000
Aggregated interests over time
When a relevant acquisition arises from the aggregation of an interest acquired by a person in a private landholder with other interests acquired in the landholder by the person, an associated person or any other person in an associated transaction, duty is charged at the rates set out in Chapter 2. That means duty is charged on the aggregate of the amounts separately calculated in respect of the interest acquired by the person and each of the other interests that comprise the relevant acquisition acquired in the 3 years preceding the acquisition of the interest by the person.
For example, the duty payable on a relevant acquisition of a 24% interest in a landholder that is a private unit trust scheme comprising the aggregation of 4 6% interests acquired over a 4-year period when the Victorian land holdings of the landholder in the first 2 years were valued at $8 million and in the latter 2 years were valued at $10 million is calculated as follows:
- Value of landholder's Victorian land holdings in fourth year: $10 million
- Interest acquired in fourth year: 6%
- Dutiable value of interest ($10 million × 6%): $600,000
- Value of landholder's Victorian land holdings in third year: $10 million
- Interest acquired in third year: 6%
- Dutiable value of interest ($10 million × 6%): $600,000
- Value of landholder's Victorian land holdings in second year: $8 million
- Interest acquired in second year: 6%
- Dutiable value of interest ($8 million × 6%): $480,000
- Value of landholder's Victorian land holdings in first year: $8 million
- Interest acquired in first year: 6%
- Dutiable value of interest ($8 million × 6%): $480,000
- Dutiable value of relevant acquisition (value of fourth, third and second year interests): $1.68 million
- Relevant rate of duty: 5.5%
- Duty payable on relevant acquisition ($1.68 million × 5.5%): $92,400
Further interest
When a relevant acquisition has previously occurred in a landholder, and a further interest is acquired in the landholder, duty on the further interest is calculated by determining the duty that would be chargeable on the prior interests acquired plus the further interest and subtracting from that amount the duty that would be chargeable in respect of the prior interests.
The reference to duty chargeable is not a reference to duty actually paid on the prior interests at the time of their acquisition, but rather a reference to the duty that would be chargeable at the time of the acquisition of the further interest.
For example, John Citizen made a relevant acquisition of a 25% interest in a landholder that was a private unit trust scheme in June 2020. At that time, the Victorian land holdings of the scheme were valued at $10 million and the duty paid in respect of the acquisition was $137,500 ($10 million × 25% × 5.5%).
In August 2021, John Citizen entered into an agreement and acquired a further 10% interest in the scheme. By August 2021, the value of the scheme’s Victorian land holdings had increased to $12 million. The duty payable on the acquisition of the further interest is calculated as follows:
- Value of scheme's Victorian land holdings in August 2021: $12 million
- Sum of further and prior interests: 35%
- Dutiable value of further and prior interests ($12 million × 35%): $4.2 million
- Relevant rate of duty: $110,000 plus 6.5% of amount in excess of $2 million
- Duty payable on further and prior interests ($110,000 + (6.5% × $2.2 million): $253,000
- Dutiable value of prior interest ($12 million × 25%): $3 million
- Relevant rate of duty: $110,000 plus 6.5% of amount in excess of $2 million
- Duty payable on prior interest ($110,000 + (6.5% × $1 million)): $175,000
- Duty payable on acquisition of further interest ($253,000 – $175,000): $78,000
Please refer to s86 of the Act and more information about the calculation of duty (Revenue Ruling DA-055v3).
Public landholders
A relevant acquisition in a public landholder (being a listed company or public unit trust scheme) is chargeable at a concessional rate of 10% of the duty that would be chargeable on a transfer of all of the Victorian land holdings of the landholder (effectively as if a 100% acquisition had been made in the landholder).
This is the case, even if the relevant acquisition is not the acquisition of an interest of 100% in the landholder. The duty is calculated based on the value of the land holdings of the landholder at the date of the relevant acquisition.
The concessional rate of duty does not apply in respect of a relevant acquisition in a listed company or listed trust that has been a listed company or listed trust for less than 12 months, a declared public unit trust that has been registered as such for less than 12 months or a widely held trust that has satisfied the definition of a widely held trust for less than 12 months. In these circumstances, the duty will be calculated as if the relevant acquisition was made in a private landholder.
The public landholder concessional rate of duty also does not apply where the relevant acquisition is eligible for a concessional rate of duty under section 250B or 250DI of the Act.
Duty calculation of a relevant acquisition in a public landholder
- Value of landholder’s Victorian land holdings: $20 million
- Deemed interest acquired: 100%
- Dutiable value of interest ($20 million × 100%): $20 million
- Relevant rate of duty: $110,000 plus 6.5% of amount in excess of $2 million
- Duty otherwise payable on interest ($110,000 + 6.5% × $18 million): $1.28 million
- Concessional rate of duty payable: 10%
- Duty payable on relevant acquisition ($1.28 million × 10%): $128,000
Note: If the bidder subsequently acquires the remaining 5% of the shares in the company, no duty is payable in respect of this further acquisition by the bidder. This concession only extends to the bidder and not to associated persons of the bidder.
Please refer to ss. 87 and 88 of the Act for more information about the calculation of duty and to Revenue Ruling DA-055v3.
Phasing-in formula and deduction for marketable securities duty
Where a landholder’s land holdings in Victoria are between $1 million and $2 million, duty is calculated in accordance with the formula [(A – $1 million)/$1 million] × B, where:
- 'A' is the unencumbered value of the land holdings in Victoria of the landholder at the time the relevant acquisition was made, and
- 'B' is the duty that, apart from the application of the formula, would be chargeable under the provisions of the Act.
A deduction is also available for any marketable securities duty paid in Victoria or another jurisdiction in Australia on the acquisition of an interest in the landholder.
Please refer to ss. 89 and 89A of the Act for more information about the calculation of duty and to Revenue Ruling DA-055v3.
Land holdings that have entered the commercial and industrial property tax reform
Where the land holdings of a company or unit trust include properties that have entered the commercial and industrial property tax reform, those properties are taken into account in determining whether the company or unit trust is a landholder. However, the properties may be wholly or partly excluded from the calculation of duty on a relevant acquisition.
For more information on calculating duty on a relevant acquisition where the land holdings include tax reform scheme land, please refer to our commercial and industrial property tax webpages.
Concessions relating to certain leasehold estates, fixtures and primary production land
To ensure consistency in the duty outcomes under Chapters 2 and 3 of the Act, certain concessions are available when determining the duty payable on a relevant acquisition in a landholder whose land holdings include leasehold estates, fixtures on another person's land and/or primary production land.
For more information on these concessions, please refer to Revenue Ruling DA-055v3.
