Land transfer duty - Assumed tax amounts

Preamble

1. The Duties Act 2000 (the Act) imposes duty on the transfer of dutiable property, including land. Duty is chargeable on the ‘dutiable value’ of the property, which is defined in section 20(1) as the greater of:

   • the consideration (monetary or non-monetary) for the dutiable transaction; and
   • the unencumbered value of the dutiable property.

2. For some transfers of land, the consideration under section 20(1) is not confined to the sale price stated in the contract of sale. The purchaser may also be required under the contract to provide, in addition to the sale price, an amount for or towards a tax liability for which the vendor is liable in respect of the land (an Assumed Tax Liability Amount).

3. This ruling explains when an Assumed Tax Liability Amount forms part of the consideration for a transfer of land under section 20(1). It provides specific guidance on land tax, windfall gains tax (WGT) and congestion levy liabilities. It does not address the meaning of consideration in other sections of the Act (for example, the lease provisions), or the characterisation of other amounts under section 20(1), including late settlement interest.

4. This ruling is provided as a guide only and is not exhaustive. If your circumstances are not covered, you can apply for a private ruling in accordance with Revenue Ruling GEN-009v3.

Ruling

5. The term ‘consideration’ is not defined in the Act. In Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 and Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51 (Lend Lease), the High Court held that the consideration for a transfer of land is the money or value received by the vendor so as to move the transfer to the purchaser as stipulated in the agreement. That inquiry is determined by viewing the transaction as a whole. An amount need not be paid directly to the vendor or at the time of the transfer of land to form part of the consideration. Nor is the terminology used in the transaction documents determinative of whether the amount is consideration.

6. In Commissioner of State Revenue v 1043 Melton Highway Pty Ltd [2020] VSC 820 (Melton Highway), the Supreme Court applied Lend Lease and framed the question as whether, at the time of transfer, the vendor would transfer the land only in return for the payment in issue. If so, the payment moves the transfer and is consideration. The fact that the payment also serves another purpose does not prevent it from being consideration.

7. Consistent with Lend Lease and Melton Highway, an Assumed Tax Liability Amount forms part of the consideration for a transfer of land under section 20(1) if, assessed at the time of transfer and viewing the transaction as a whole, it is part of what moves the transfer.

8. The characterisation of an Assumed Tax Liability Amount as consideration turns on its substance, not form. Labels (including ‘adjustments’) and payment direction (to the vendor directly or to a third party) are not, by themselves, determinative of the characterisation.

Land tax

Sale price of land is less than the threshold amount

9. Section 10G of the Sale of Land Act 1962 (the SLA) provides that a provision of a contract of sale for a sale price less than the ‘threshold amount’ is of no effect to the extent it purports to require the purchaser to pay an amount for or towards land tax for which the vendor is or may become liable in respect of the land. Accordingly, an amount purportedly required under such a provision cannot move a transfer of land and is not consideration under section 20(1) of the Act.

10. The threshold amount was $10 million for the 2024 calendar year and is adjusted annually in accordance with the consumer price index under section 10I of the SLA. The current threshold amount is published on the SRO website.

Sale price of land is at or above the threshold amount

11. If the sale price of land is at or above the threshold amount, the purchaser may agree to provide an amount for or towards the vendor’s land tax liability (an Assumed Tax Liability Amount). That amount forms part of the consideration for a transfer of the land under section 20(1) if, assessed at the time of transfer and viewing the transaction as a whole, it is part of what moves the transfer.

12. Where the sale price is at or above the threshold amount, a contract of sale may apportion the vendor’s land tax liability for the land tax year that includes settlement. In that case, the contract typically requires the purchaser to pay, in addition to the sale price, an amount calculated under the contract for or towards the vendor’s land tax liability at or before settlement. Without that amount, the vendor would not transfer the land. That amount forms part of what moves the transfer of land under the contract and therefore constitutes consideration for the transfer of land.

Windfall gains tax

Existing windfall gains liability at contract date

13. Section 10H of the SLA provides that a provision of a contract of sale (or an option) is of no effect to the extent it purports to require a purchaser to pay an amount for or towards a WGT liability that exists when the contract is made (or option granted). Accordingly, an amount purportedly required under such a provision cannot move a transfer of land and is not consideration for the transfer under section 20(1) of the Act.

No existing windfall gains liability at contract date

14. Where no WGT liability exists when a contract of sale is made, the parties may provide that, if one arises before settlement, the purchaser will provide an amount for or towards the vendor’s WGT liability (an Assumed Tax Liability Amount). That amount forms part of what moves the transfer of land under the contract if it is provided in addition to the sale price, such that without it the vendor would not transfer the land. The timing of the payment, and whether it is made to the vendor or the Commissioner, are not, by themselves, determinative of the characterisation.

Congestion levy

15. Under the Congestion Levy Act 2005, the owner of a car park in the levy area is liable each year to pay the levy imposed on leviable parking spaces on the land. The owner may be solely liable or jointly and severally liable, depending on the type of car park.

16. When a car park is sold under a contract of sale, the purchaser may agree under the contract to provide an amount for or towards the vendor’s congestion levy liability (an Assumed Tax Liability Amount). That amount forms part of what moves the transfer if it is provided in addition to the sale price, such that without it the vendor would not transfer the land.

Municipal rates

17. For the rating period that includes settlement of a contract of sale, rates are typically adjusted at settlement so that the purchaser reimburses the vendor for rates paid by the vendor that are attributable to the period after settlement. Under section 175(1)(a) of the Local Government Act 1989, a person who becomes the owner of rateable land must pay any current rate or charge on the land. The reimbursement therefore reflects the vendor’s payment of an amount that, had it remained unpaid, the purchaser would have been required to pay on becoming the owner. The Commissioner does not consider such a reimbursement to be consideration for the transfer of land under section 20(1) of the Act.

Date of effect

18. The Commissioner’s views on Assumed Tax Liability Amounts for land tax (paragraphs 11-12) and congestion levy (paragraph 15-16) apply only to contracts of sale entered into on or after 17 August 2026. The Ruling otherwise restates the Commissioner’s existing views.

Disclaimer

Rulings do not have the force of law. Each decision made by the State Revenue Office is made on the merits of each individual case having regard to any relevant ruling. All rulings must be read subject to Revenue Ruling GEN-001.