ARTICLE · 03 OCTOBER 2012

New duty law casts wider net in Victoria

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Any new arrangement for a landholding company or unit trust in Victoria may involve large amounts of unexpected duty.

AustraliaTax

Michael Norbury

Since 1 July 2012, any new arrangement involving a landholding company or unit trust may involve large amounts of unexpected duty.

From that date where a company or unit trust holds Victorian land valued at $1,000,000 or more, and the company or unit trust enters into an arrangement which changes the entitlement to participate in dividends, income, rent, profits, capital growth or the proceeds of sale of land then a hefty duty liability may arise.

There does not need to be any change in share or unitholding or the rights attached to shares or units in order for the duty liability to arise.

As an example, consider a typical property development scenario. A land holding company or unit trust does not have the skills to develop its land. It enters into an arrangement with an experienced property developer to develop the land. After payment of all costs they agree to share profits 50/50.

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