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As a young farmer buying your first farmland property in Victoria, you will be entitled to a duty exemption or concession if you satisfy certain eligibility criteria.

The available exemptions and concession apply to contracts for single parcels of farmland valued at $750,000 or less, entered into on or after 1 July 2011. They are:

  • A full exemption from duty on farmland valued at no more than $300,000,
  • A partial exemption from duty on farmland valued at no more than $600,000. This is calculated by subtracting the duty payable on $300,000 from the duty payable on the value of the farmland (of $600,0000 or less), or
  • A concession from duty for farmland valued between $600,000 and $750,000

Note: this young farmer exemption is separate and distinct from the family farm exemption that is available on the transfer of a family farm.

Apply as a young farmer

Are you eligible?

You must satisfy certain criteria to be eligible:

  1. You must be under 35 at the date the contract for the transfer of the farmland property,
  2. The property must be yours and your partner’s first farmland property,
  3. The value of the property must not exceed $750,000, and
  4. You must be carrying on, or intending to carry on, a business of primary production in relation to the purchased property

Your partner is your spouse or domestic partner.

Are you a young farmer?

A young farmer is a natural person, who is under 35 at the date the contract for the transfer of the dutiable property is entered into and who is carrying on, or intends to carry on, a business of primary production in relation to the purchased property.

If your partner is 35 or over and is buying the farmland with you, you may still claim the exemption or concession on your share of the farmland.

Recognising the different structures by which a person may purchase farmland, the exemption or concession also applies to a young farmer business entity which may be a:

  • Trustee for a young farmer,
  • Company (not acting in the capacity of a trustee under a trust) in which all the shares are owned by a young farmer, or the young farmer and the young farmer’s partner,
  • Trustee of a discretionary trust, the capital beneficiaries of which are limited to a young farmer, or the young farmer and the young farmer’s partner, or a
  • Trustee of a fixed trust, the beneficiaries of which are limited to a young farmer, or the young farmer and the young farmer’s partner

Where a young farmer business entity buys the farmland, the young farmer in respect of that entity must be under 35 to be eligible for the exemption or concession.

First farmland property

The property purchased must be yours or your partner’s first farmland property. Accordingly, if either you or your partner has previously owned an estate in fee simple in farmland, you will both be ineligible for the exemption or concession.

There are, however, no restrictions on ownership of non-farmland property so you will still be eligible for the exemption or concession if you or your partner has previously owned non-farmland property.

It is common practice for a farmer to buy farmland in a company or trust structure. The Duties Act 2000 (the Act) disqualifies you from obtaining the exemption or concession where you have held an interest in an entity which owns or has previously owned farmland. As such, you will be ineligible for the exemption or concession if you or your partner:

  • Currently holds shares in a company, if the company holds or has previously owned farmland, or
  • Previously held shares in a company, if those shares were held at the same time that the company owned farmland, or
  • Is a beneficiary of a fixed trust and the trust property includes or has previously included farmland, or
  • Was previously a beneficiary of a fixed trust and, while you or your partner was a beneficiary, the trust property included farmland, or
  • Is a capital beneficiary of a discretionary trust and the trust property includes or has previously included farmland, or
  • Was previously a capital beneficiary of a discretionary trust and, while you or your partner was a capital beneficiary, the trust property included farmland

If the farmland is being purchased by a young farmer business entity, the following interests will disqualify the entity from obtaining the exemption or concession:

  • Where the purchaser is a trustee for the young farmer and the trustee holds or has previously held farmland, or
  • Where the purchaser is a company (not acting in the capacity of a trustee under a trust) and the company holds or has previously held farmland, or
  • Where the purchaser is a trustee of a discretionary trust and the trustee holds or has previously held farmland, or
  • Where the purchaser is a trustee of a fixed trust and the trustee holds or has previously held farmland on trust for that fixed trust

The underlying rationale for these measures is that if you or your partner owns, or has previously owned, shares in a family company or family trust which owned farmland, then you have already had the benefit of the farmland owned by that company.

It is recognised, however, that in some situations share ownership and trust interests may extend beyond family companies and trust situations. For example, you may own securities in a listed public entity which directly owns farmland that is primarily used for the business of primary production. Depending on the nature of the ownership of the securities in a listed entity, you may be ineligible for the duty concession.

Disqualifying interests

To ensure the provisions are read in accordance with the express purpose and object of the exemption, each individual transaction will be assessed on its merits. We will consider the following general principles in determining whether there is a disqualifying interest:

  • What was the purpose for which the securities in a publicly listed entity were acquired? Were they acquired as part of an investment strategy for the purposes of obtaining an income stream?
  • What are the farmer’s rights under the securities? Do you have any degree of day-to-day control or input into the decisions of the listed entity, or do you have limited rights such as those attaching to ordinary shares including the right to attend and vote at general meetings, and the right to distribution of profits?
  • Are you entitled to an distribution of farmland from the entity?
  • How remote is the farmer’s investment from the farmland? For example, do you own the securities directly, or do you own the securities more remotely through a series of other entities or investment platforms?

Accordingly, where you own securities in a publicly listed entity but those securities do not provide you with any relevant rights over the farmland held by the listed entity, then those securities will not be regarded as a disqualifying interest for the purposes of the exemption or concession.

Primary production requirement

Within five years of the date of the contract for the transfer of the farmland, the young farmer or the young farmer in relation to the young farmer business entity must be normally engaged in a substantially full-time capacity in the business of primary production of the type carried out on the farmland.

Being ‘normally engaged in a substantially full-time capacity’ in the business of primary production requires the business to be the person’s main activity. There should be regular participation in the business for a considerable part of that person’s time. Casual or intermittent employment in the business will not satisfy this requirement.

A young farmer, or young farmer business entity, who has received the exemption or concession must notify us of any change in circumstances that may result in the primary production requirement not being complied with.

If a young farmer, or young farmer business entity, has received the exemption or concession and the primary production requirement has not been complied with, liability for duty will arise in respect of the acquisition subject to the exemption or concession.

Farmland with multiple parcels

The transfer of farmland with multiple parcels is treated differently to the transfer of a single parcel of farmland.

Where multiple parcels of farmland are acquired, to qualify for the exemption or concession, the dutiable value of at least one of those parcels must not exceed $300,000 (regardless of whether the combined value of all parcels is over $300,000).

The young farmer, or young farmer business entity, is then entitled to an exemption from duty in respect of $300,000 of the total dutiable value of the transactions. The exemption will be applied against the dutiable values of the parcels of land in order of ascending dutiable values.

Example

A young farmer enters into three dutiable transactions with dutiable values of:

  • $200,000 (Transaction A),
  • $300,000 (Transaction B), and
  • $500,000 (Transaction C)

An exemption in respect of $300,000 of the total dutiable value of the dutiable transactions is first applied to the dutiable transaction with the lowest dutiable value, and then to the dutiable transaction with the next lowest dutiable value and so on. This means that a full exemption from duty applies to Transaction A and a partial exemption applies to Transaction B, being an exemption in respect of $100,000 of the dutiable value of Transaction B.

For the purposes of assessing the young farmer’s duty liability, Transaction B and Transaction C are taken to have a dutiable value of $200,000 and $500,000 respectively. Duty is calculated at the standard rates on Transaction B and Transaction C individually.

Buying farmland with someone other than your partner

Where a young farmer acquires a partial interest in farmland, the exemption or concession will be available to each holder of a partial interest in the farmland, subject to satisfying the eligibility requirements.

Accordingly, where there are two eligible young farmers acquiring a half share interest in an estate in fee simple in farmland, each young farmer will be entitled to the exemption or concession with respect to their interest. This applies whether the young farmer purchases with another person who is eligible or not.

Example 1

Adam and Ben, who are both eligible young farmers, each purchase a 50 per cent interest in a farmland property. The total purchase price is $590,000. Accordingly the dutiable value of each person’s interest is $295,000.

The young farmer’s exemption threshold is $300,000. Accordingly Adam and Ben will each qualify for a full exemption from duty on their acquisition.

Example 2

Cassie, who is an eligible young farmer, and Daniel, who is not an eligible young farmer, each purchase a 50 per cent interest in a farmland property. The total purchase price is $500,000. Accordingly the dutiable value of each person’s interest is $250,000.

The dutiable value of Cassie’s interest falls within the young farmer’s exemption threshold. Accordingly, Cassie is fully exempt from duty on their acquisition.

Daniel will however, be liable for duty on his acquisition. Duty on $500,000 is $25,070. Accordingly, Daniel will be liable for duty in the amount $12,535, being 50 per cent of $25,070.

Choosing this or the PPR concession

If you buy farmland and it is also your principal place of residence (PPR), you may also be entitled to a PPR concession.

You must, however, choose between receiving the young farmer duty exemption/concession or the PPR concession. You cannot receive both. If you are unsure which one is better for you to receive, you can contact us on 13 21 61.

Apply as a young farmer