Here are answers to some frequently asked questions about economic entitlement.
What is an economic entitlement?
An economic entitlement entitles a person to any one or more of the below:
- to participate in the income, rents or profits derived from the land
- to participate in the capital growth of the land
- to participate in the proceeds of sale of the land
- to receive any amount determined by reference to any of the above matters
- to acquire any entitlement described above.
The land must have an unencumbered value of more than $1 million.
When is duty payable?
Where a person obtains an economic entitlement, the person is taken to have acquired an ownership interest in the land that is chargeable with duty.
How much duty is payable?
If a person enters into an arrangement in relation to land under which the person is or will be entitled (directly or through another person) to an economic entitlement in relation to the land, that person is taken to have obtained beneficial ownership in the land in proportion to the economic entitlement obtained.
Where the arrangement provides an economic entitlement by reference to a stated percentage and nothing else, duty is calculated based on the value of the proportion of the beneficial ownership in land obtained, charged at the standard land transfer duty rate.
Calculate your duty
Land transfer duty is calculated on the dutiable value of your property.
If you don't pay your duty within 30 days of settlement, penalty tax and interest may apply.
Foreign Purchaser Additional Duty Rates
You are deemed to have acquired 100% of the beneficial ownership in land if the arrangement under which the economic entitlement is acquired:
- does not specify the percentage of the economic entitlement acquired
- includes any other entitlement of, or amount payable to, the person or an associated person, or
- the arrangement under which the economic entitlement is acquired entitles the person(s) to more than one type of economic entitlement.
The Commissioner may determine a lesser percentage if the Commissioner considers it appropriate in the circumstances.
How do I lodge for payment of duty?
Once you have acquired the economic entitlement, you must complete the Digital Duties Form, selecting ‘change of beneficial ownership’ and lodge under ‘Electronic Lodgement Model’ using the Duties Online portal.
Can I get a private ruling?
You may lodge a private ruling if acquisition not completed and:
- it is unclear if the acquisition will give rise to an acquisition of an economic entitlement, or
- you are requesting that the Commissioner determine a lesser percentage than 100%.
What documents do I have to lodge?
All contracts and agreements surrounding development and the interest of the parties.
Valuation of the land showing the unencumbered value as at the time the economic entitlement is acquired.
If you are requesting that the Commissioner determine a lesser percentage than 100%:
- submissions as to the appropriate percentage
- calculations and information in support.
