Changes to Victorian land rich duty announced in State Budget

On 3 May 2011, the Victorian Government handed down its 2011-2012 Budget which announced proposed changes to the land rich duty rules to take effect from 1 July 2012.

Proposed move from 'land rich' to 'landholder' model

Under the existing provisions of the Victorian Duties Act 2000, duty is imposed where a person acquires an interest of 50% or more in a 'land rich' private company or 20% or more in a 'land rich' private unit trust (this is referred to as a 'relevant acquisition'). A 'land rich' entity is one that holds land in Victoria with an unencumbered value of at least AUD$1 million and which has landholdings (wherever located) that represent 60% or more of its total assets. Duty on a 'land rich' acquisition is broadly payable at 5.5% of the unencumbered value of the underlying land held by the land rich entity proportionate to the percentage interest acquired in the land rich entity.