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Are water entitlements dutiable?

Water entitlements transferred with land (excluding stock and domestic allowance not yet unbundled in southern Victoria) are not dutiable because they:

  • Do not come within the definition of dutiable property under the Duties Act 2000.
  • Can be independently traded and so do not form part of the land.

The value of stock and domestic allowance not yet unbundled in southern Victoria cannot be traded independently from the land. As such, it is taken into account for the purpose of calculating the dutiable value of the land.

Apportioning non-dutiable components of a transfer

Where the consideration for a dutiable transaction includes consideration for non-dutiable water entitlements, it is necessary to deduct the value of any non-dutiable water entitlements that are transferred with land from the total purchase price for duty purposes.

This will require you to provide your own valuation in relation to the water entitlements and use this to apportion the consideration between the dutiable and non-dutiable components of the transaction. 

This applies to all water entitlements in northern and southern Victoria. It applies to all contracts entered into on or after 1 July 2007 and for unbundled water in northern Victoria, all contracts which settle on or after 1 July 2007.

We will generally accept the apportionment made by the parties between the land and improvements and the non-dutiable water entitlements. This approach is, however, subject to the resulting value for the land and improvements reflecting its market value, taking into account the land's accessibility to water and any existing irrigation infrastructure.

You will need to lodge supporting documentation for a dutiable transaction which includes consideration for non-dutiable water entitlements with us. You can lodge those documents when you complete and submit the digital duties form.

Unbundled water entitlements

Unbundling separates water from land and divides an irrigator’s water entitlement into components which can be readily transferred.

Certain water entitlements in northern Victoria were unbundled on 1 July 2007, and in parts of southern Victoria (Thomson/Macalister and the Werribee water systems) on 1 July 2008.

Further information on unbundling can be obtained from these Victorian water authorities:

To determine whether water is in northern or southern Victoria, please refer to the following guide.

Northern Victorian water is all water zones north of the Divide Southern Victorian water is all water zones south of the Divide
  • Greater Goulburn (zones 1A and 1B)
  • Broken (zones 2A and 2B)
  • Lower Goulburn (zone 3)
  • Campaspe (zone 4)
  • Loddon (zones 5A and 5B)
  • Hume to Barmah (zone 6)
  • Barmah to Nyah (zone 7)
  • Nyah to SA border (zone 8)
  • Ovens and King (zones 9A and 9B)
  • Wimmera irrigation (zone 21)
  • Unbundled
    • Werribee (zones 31A, 31B and 31C)
    • Macalister (zones 41A and 41B)
    • Thomson (zones 42A, 42B and 42C)
  • Not unbundled
    • Maribyrnong (zones 32A and 32B)
    • Lower LaTrobe (zones 43A and 43B)

When is a valuation required?

If we regard the apportionment made by the parties as an inadequate value for the land and improvements, or the parties are related as previously mentioned, a valuation may be requested.

The valuation should be from a certified practising valuer who is a member of the Australian Property Institute or a member of the Real Estate Institute of Victoria with sworn valuer accreditation.

Correct methodology for valuation

The correct valuation approach is to value the land and the improvements on the basis of a going concern and that the water entitlement will continue to be available for the particular use.

The Valuer-General has endorsed the following methodology:

  1. The valuation should confirm the consideration, being the sale price, i.e. a before valuation which identifies the value of the:
    • land,
    • water, and
    • improvements including water delivery infrastructure such as irrigation channels, dams and pumps on the land.
  2. It should then assess the value of the property excluding the value of the non-dutiable water entitlement, i.e. an after valuation of the:
    • land, and
    • improvements including the water delivery infrastructure at the same added value as 'before'.
  3. The difference between the before and after value is the added value of the water entitlement to the going concern asset.

Generally, the value of the water entitlement should not be greater than its tradeable market price.