Young farmer duty exemption or concession

Key information

As a young farmer buying your first farmland property in Victoria, you may be entitled to a duty exemption or concession. This exemption is separate from the family farm exemption.

If you buy a single parcel of farmland:

• A full exemption from duty is available on farmland valued at $600,000 or less.
• A concession from duty is available for farmland valued from $600,001 to $750,000. 

If the transfer includes multiple parcels of farmland, different rules apply. At least one parcel must meet the relevant value threshold to qualify for an exemption or concession.

Eligibility criteria

You must satisfy all these eligibility criteria:

• You must be under 35 at the date of the contract for the transfer of the farmland property.
• The property must be the first farmland property for both you and your partner.
• The property value must be $750,000 or less.
• You must carry on, or intend to carry on, a business of primary production in relation to the purchased property.

Your partner means your spouse or domestic partner.

Young farmer status

A young farmer is a natural person who meets the eligibility criteria above.

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

The exemption or concession can also apply where farmland is purchased through certain business structures. These include a:

• nominee for a young farmer
• company (not acting in the capacity of a trustee under a trust) where all shares are owned by a young farmer, or the young farmer and their partner
• trustee of a discretionary trust, where the capital beneficiaries are limited to a young farmer, or the young farmer and their partner
• trustee of a fixed trust, where the beneficiaries are limited to a young farmer, or the young farmer and their partner.

Where a business entity buys the farmland, the young farmer associated with that entity must be under 35 at the date of the contract to be eligible.

First farmland property

The property purchased must be your and your partner’s first farmland property. If either you or your partner have previously owned an estate in fee simple in farmland, you are both ineligible for the exemption and concession.

However, there are no restrictions on ownership of non-farmland property. You remain eligible if you or your partner have previously owned non-farmland property.

It is common practice for a farmer to buy farmland through a company or trust structure. Under the Duties Act 2000 (the Act) you are not eligible for the exemption or concession if you have held an interest in an entity which owns or has previously owned farmland. You will be ineligible for the exemption or concession if you or your partner:

• currently holds shares in a company that holds or has previously owned farmland
• previously held shares in a company if those shares were held at the same time that the company owned farmland
• is a beneficiary of a fixed trust and the trust property includes or has previously included farmland
• was previously a beneficiary of a fixed trust and, while you or your partner was a beneficiary, the trust property included farmland
• is a capital beneficiary of a discretionary trust and the trust property includes or has previously included farmland
• 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 a young farmer business entity buys the farmland, the entity is not eligible for the exemption or concession if it is a:

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

All the arrangements listed above are also known as disqualifying interests.

Disqualifying interests

To ensure the exemption or concession is applied consistently, each transaction is assessed on its merits. We 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 to obtain 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 profit distributions?
• Are you entitled to a 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?

These principles recognise that prior interests in entities that own farmland may indicate that you or your partner have already received the benefit of farmland ownership.

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 primarily used for the business of primary production. Depending on the nature of the ownership of the securities in a listed public entity, you may be ineligible for the duty concession. However, where securities in a listed public entity do not provide you with any relevant rights over the farmland held by the listed entity, those securities are not regarded as a disqualifying interest for the purposes of the exemption or concession.

Primary production requirement

Primary production is defined as using land primarily for any of the following:

• Cultivation to sell the produce of cultivation (whether in a natural, processed or converted state).
• The maintenance of animals or poultry to sell them or their natural increase or bodily produce.
• Keeping bees to sell their honey.
• Commercial fishing, including the preparation for commercial fishing or the storage or preservation of fish or fishing gear.
• The cultivation or propagation for sale of plants, seedlings, mushrooms or orchids.

If a young farmer or a nominee buys the farmland, the young farmer must carry on the business of primary production on the farmland. They must be normally engaged in a substantially full-time capacity in that business within 5 years of the date of the contract.

If a company (not acting as a trustee) or a trustee buys the farmland, the principal business of the company or trust must be primary production on the farmland within 5 years of the date of the contract. The young farmer must also be normally engaged in a substantially full-time capacity in that business.

A person is normally engaged in a substantially full-time capacity in the business of primary production if that business is the person’s main activity. This requires regular participation in the business for a considerable part of that person’s time. Casual or intermittent employment in the business does not satisfy this requirement.

If you receive the exemption or concession, you must notify us within 30 days of becoming aware of any change in circumstances that may mean the primary production requirement is not fulfilled. If the primary production requirement is not complied with, we can investigate you or your partner and reassess your duty liability even if more than 5 years have passed since you or your partner purchased the farmland. 

If the primary production requirement has not been met, you may be reassessed for duty on the property for which the exemption or concession was claimed.

Carrying on a business for land owned by a young farmer

A business of primary production may be carried on through one of a number of business structures, such as a sole trader, partnership, company or trust.

We consider a young farmer to be carrying on a business of primary production in relation to the land if the farmer effectively manages and controls that business, regardless of the type of business structure used.

Complex purchase arrangements

Farmland with multiple parcels

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

To qualify for the exemption or concession where multiple parcels of farmland are acquired, the dutiable value of at least one of those parcels must not exceed $600,000. It does not matter if the combined value of all parcels is more than this amount.

The young farmer, or young farmer business entity, is then entitled to an exemption from duty in respect of $600,000 of the aggregated dutiable value of the dutiable transactions. The exemption is applied to the parcels of land in order of ascending dutiable values.

Buying farmland with someone other than your partner

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

Accordingly, where there are 2 eligible young farmers acquiring a half share interest in an estate in fee simple in farmland, each young farmer is entitled to the exemption or concession for their interest. This applies whether the young farmer purchases with another person who is eligible or not.

Choosing between duty concessions

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

However, you must choose between receiving the young farmer duty exemption or concession or the PPR concession. You cannot receive both. 

If you have any questions about these concessions, contact us on 13 21 61.