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Prior 1 July 2012, if you acquired an interest, such as shares or units, in a company or unit trust scheme that is a land rich landholder, you may be liable for land rich duty.

From 1 July 2012, the landholder provisions apply. 

The following information outlines the operation of the land rich duty provisions in respect of acquisitions of interests in land rich landholders that occurred prior to 1 July 2012. All references to the Duties Act 2000 are to the Act in force prior to 1 July 2012.

A landholder is a private company, private unit trust scheme, or wholesale unit trust scheme. A listed company or a public unit trust scheme is not a landholder under the land rich provisions.

For more information, see ss. 3 and 71(1) of the Duties Act 2000 (the Act).

What is a land rich landholder?

A landholder is land rich if:

  • It has land holdings in Victoria with an unencumbered value of $1,000,000 or more, and 
  • Its land holdings in all places, whether within and outside Australia, comprise 60 per cent or more of the unencumbered value of all its property.

If a landholder does not meet either one or both of the above tests, it is not a land rich landholder for the purposes of the provisions.

Unencumbered value means the market value of the item of property, without being reduced by the amount of any charges, mortgages or other encumbrances.

In determining the unencumbered value of all the property of a landholder, and whether it is land rich, the following property is not taken into account:

  • Cash, whether in Australian or other currency, 
  • Money in an account at call or money on deposit with any person, negotiable instruments or debt securities, 
  • Loans that, according to their terms, are to be repaid on demand by the lender or within 12 months after the date of the loan, 
  • If the landholder is a unit trust scheme, loans to beneficiaries of the scheme or to persons who, in relation to any trustee or beneficiary of the scheme, are associated persons,
  • If the landholder is a private company, loans to shareholders of the company or to persons who, in relation to the company or to a shareholder or director of the company, are associated persons, 
  • Land use entitlements, 
  • Units, shares or any other interest in a linked entity (other than a linked entity whose property is not counted under s74(5)), including any debts existing between the landholder and a linked entity to the extent of the percentage of the interest the landholder holds in the linked entity, 
  • The deposit and amount due under an agreement referred to in s73, 
  • Any property of a kind prescribed by the regulation (currently no property has been prescribed by the regulations), and
  • Any property that the landholder is unable to satisfy the Commissioner was obtained otherwise than to reduce its land to property ratio.

For the purposes of the land rich provisions, some property (other than land) is taken into account.

Please refer to ss. 71(2) to (5) of the Act.