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Land Transfer Duty (formerly Stamp Duty) is the most common land tax that most Victorians pay or are aware of.
As part of our Property Taxes in Victoria series we provide a detailed overview of the most common property duties and land taxes. Please note that tax laws, thresholds and tax rates are subject to annual revisions, so check the relevant government website for the latest information.
Landholder duty is a newer tax introduced in 2012, replacing the former "land rich" duty model. Tax is imposed when a person acquires a significant interest in an entity that holds Victorian land over the threshold amount of $1 million.
What it is Land Transfer Duty
Land transfer duty is a state tax paid by the purchaser when they acquire land or real property in Victoria. Whenever you buy a house, land, or investment property (or even acquire it by gift or through certain trust or company transactions), you must pay land transfer duty on the transaction.
The duty is calculated on the dutiable value of the property, generally the purchase price or the market value, whichever is higher.
The rates are progressive for standard residential or commercial property, rates range from about 1.4% up to 6.5% on the portion of value above certain thresholds (with exact rates set by the State Revenue Office each year).
There are various discounts or exemptions for certain buyers (first home buyers, pensioners, young farmers, etc.) and situations such as transfers between spouses and for charities. The duty must be paid before the transfer of land is completed. When you are buying a property, at settlement the purchaser's solicitor or conveyancer will handle the duty payment to the State Revenue Office (SRO) as part of the conveyance.
Landholder duty
In addition to duty on direct property purchases, Victoria also imposes landholder duty to catch certain indirect acquisitions of land. This means if you acquire a significant interest (usually 50% or more for a private company, or 90% for a listed company) in a company or unit trust that owns Victorian land worth $1 million or more, duty is payable as if you had bought the land itself. For example, buying shares in a land-rich company can trigger landholder duty.
The landholder duty rate is the same as transfer duty (plus any relevant surcharges like foreign purchaser duty would also apply). This prevents buyers from avoiding stamp duty by purchasing the shares of a land-owning company rather than the land directly. Landholder duty can also catch incremental acquisitions – if you slowly creep your interest up in a landholding entity, the duty can apply once you pass the threshold. Note that certain corporate transactions, like internal group restructures, might get relief from landholder duty under specific provisions, but these require SRO approval.
When do these duties apply?
Land transfer duty applies on nearly all transfers of real property such as buying at auction or private sale, transfers as part of a divorce property settlement, or even when you add someone to the title.
Even if no money changes hands (say a gift to a family member), duty is assessed on the market value of the land.
For many off-the-plan purchases duty may be calculated on the land value only, if eligible. First home buyers are often given concessions.
Landholder duty applies when you acquire shares/units in a company or trust that is a "landholder" (owns = $1 million in Victorian land) – the trigger is acquiring a significant interest (20% or more for unit trusts, 50% for private companies) sro.vic.gov.au.
A common example is a corporate takeover: if you buy a company that owns a property above the threshold, landholder duty could be applicable. The acquisition of such interests must be reported to the SRO within 30 days and duty paid.
Common risks and issues
The primary risk with transfer duty is underestimating the fine print around exemptions and concessions: for example, claiming a principal place of residence concession or first home exemption requires meeting criteria (like living in the home for a continuous period).
If you claim a concession and then fail to meet the requirements (say, you didn't actually move in on time), the SRO can claw back the duty savings with penalties.
For landholder duty many may not realise that buying shares in a trust that holds land attracts duty. This often surfaces in business or corporate transactions; failing to factor in landholder duty can blow a deal's budget.
It's crucial to perform "landholder duty due diligence" when acquiring companies or transferring shares – check the value of any land assets.
Another area where disputes arise is the valuation of property: if the purchase price is deemed below market, the SRO can assess duty on a higher value. Always use a reasonable market value in related-party transfers (often requiring a valuation).
Lastly, foreign buyers have a surcharge in addition to the Foreign Purchaser Additional Duty to consider and account for.
Conveyancer vs. lawyer
In a standard home purchase, a conveyancer is well-equipped to calculate and arrange payment of land transfer (stamp duty) duty and other transactional conveyancing issues. Conveyancers cannot advise you on duty law or tax matters. They are limited to using the SRO's online Duties Online system to submit transaction details, confirm duty payable, and ensure it's paid so the transfer can be registered.
However, when transactions get, or likely to get, complex, a property or experienced tax lawyer needs to be involved to ensure you get the right information and advice.
Landholder duty matters are not typical conveyancing matters – these usually arise in commercial acquisitions. If you intend to utilise a complex exemption or concession (like a charity exemption, or an economic entitlement arrangement, discussed below), legal advice is advisable.
If you plan to use nominee or trust structures, to ensure the right amount of duty is paid and avoid penalties, then ensure you have experienced representation.
How to contest land transfer assessments: If you disagree with a land transfer duty assessment you have the right to object.
Under the Duties Act 2000 (Vic), you must generally lodge an objection with the Commissioner of State Revenue within 60 days of the assessment. The objection should state your grounds (perhaps including a valuation report if disputing value). If the SRO disallows the objection, you can seek review at the Victorian Civil and Administrative Tribunal (VCAT) or pursue litigation in the courts.
Engaging a tax lawyer to advise and handle the objection process is important – the arguments may involve fine legal distinctions, valuations, procedural requirements and strict timeframes.
If you have any queries or disputes regarding duties or taxes contact our team to get advice and clarity on your matter.
As part of our Property Taxes in Victoria series we provide a detailed overview of the most common property duties and land taxes. Please note that tax laws, thresholds and tax rates are subject to annual revisions, so check the relevant government website for the latest information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
