Changes in beneficial ownership without changing legal ownership

Key information

Dutiable property includes:

• full legal ownership of land
• interests in land, even if you do not hold the legal title.

This means you may need to pay duty if you acquire an interest in land, even if the legal owner does not change.

This includes:

• a transfer of an equitable estate or interest in land
• a transaction that results in a change in the beneficial ownership of land.

These transactions are treated the same as transferring legal title, so the same duty rates apply. 

Transactions resulting in a change in the beneficial ownership of land

Duty is payable when a transaction results in a change in the beneficial ownership of dutiable property (other than a transaction involving units in a unit trust scheme). In this context, the term 'beneficial ownership' has a broad meaning and extends beyond merely equitable ownership. For details see Woodfield Constructions v Commissioner of State Revenue (Taxation) [2005] VCAT 2518. 

For the purposes of the Act, beneficial ownership includes ownership of dutiable property by a person as trustee of a trust. It also includes the interest a person may have in a fixed trust or joint venture that owns land in Victoria.

The Act also deems a partner in a partnership to have beneficial ownership of each item of partnership property in the same proportion as their interest in the partnership. Therefore, transactions in partnership structures such as a transfer of a partnership interest or the retirement of a partner resulting in the enlargement of the other partner's interests in the partnership will be dutiable where partnership property includes dutiable property.

A change in the capacity in which a person holds dutiable property is also a change in beneficial ownership transaction that attracts duty under the Act (see Rakmy Pty Ltd v Commissioner of State Revenue [2017] VSC 237).

Other examples of transactions that result in a change in the beneficial ownership of dutiable property (land in Victoria) held under a fixed trust, joint venture and trust partnership structure follow.

Liability and lodgement requirements

The transferee, being the person who obtains the beneficial ownership or whose beneficial ownership increases, completes a dutiable transaction and is liable for duty. 

Where a written instrument such as a transfer of land, declaration of trust or Deed of Assignment is executed, the dutiable transaction must be lodged via Duties Online for our determination (Electronic Lodgement). If the change in beneficial ownership transaction does not involve a written instrument, the transferee should contact us by email to arrange lodgement. Similar to a transfer of land, duty is payable by reference to the greater of the:

• consideration (if any) for the dutiable property, and
• unencumbered value of the dutiable property.

Please refer to our summary of current duty rates for further guidance.