Decision Alert: Supreme Court Of Victoria Clarifies That A Prior Acquisition In A Public Landholder Is Not To Be Disregarded Where A Subsequent Acquisition Occurs

On 29 July 2026, the Supreme Court of Victoria handed down its judgment in ISPT Pty Ltd as trustee for ISPT Retail Australia Property Trust v Commissioner of State Revenue [2026] VSC 480, dismissing the taxpayer’s appeal against the Commissioner of State Revenue’s determination in relation to the acquisition of a “significant interest” in a landholder under the Duties Act 2000 (Vic) (Duties Act). 

The dispute arose out of the same factual scenario which was the subject of a judgment in the New South Wales Supreme Court earlier this year (you can read our Decision Alert here), being ISPT's acquisition of interests in a unit trust scheme known as Fort Street Real Estate Capital Fund (FSREC) in two staged transactions in February and July 2022. The Victorian and NSW decisions are broadly consistent in outcome, though each turns on the specific statutory provisions applicable in the relevant jurisdiction. 

The issue in the Supreme Court of Victoria was whether the July acquisition should be aggregated with ISPT’s 75.8% interest in FSREC which was earlier acquired on 18 February 2022. The February acquisition occurred when FSREC was a public landholder as a public unit trust scheme. 

The Court found that the Commissioner did not err in imposing duty on the aggregated 95.26% interest acquired in the July and February acquisitions. 

The case is important as:

• it functions as a caution for investors acquiring interests in landholders in staged transactions, particularly where the public or private status of the landholder changes between the first and second acquisitions. 
• it clarifies that where a person makes a subsequent acquisition in a landholder at a time when that person has not previously made a “relevant acquisition”, it will be a relevant acquisition under section 78(1)(a)(ii) of the Duties Act if, when aggregated with the earlier acquired interest, it amounts to a significant interest in the landholder at the time of the later acquisition. 
• it provides that in determining the duty consequences of an acquisition, the status of the landholder is assessed before completion of the transaction, not after. The effect of an acquisition on the public or private status of the landholder is not to be taken into account when determining whether a significant interest has been acquired. 

The issues

The issues for determination were:

1. whether the July acquisition was a “relevant acquisition” under section 78(1)(a)(ii) of the Duties Act which would require aggregation of the July and February acquisitions, or instead the acquisition of a “further interest” under section 78(1)(b), limiting duty to the 19.46% interest acquired in the July acquisition alone; and
2. whether, in determining the duty consequences of an acquisition, one considers only the interest acquired or also the effect of that acquisition on the nature of the landholder.

Background

FSREC 

FSREC comprised three separate unit trusts in which the units were stapled on a 1:1:1 basis.

Between 18 February 2022 and 20 July 2022, FSREC had indirect interests in land in Victoria through wholly-owned sub-trusts or chains of wholly-owned sub-trusts. 

The Victorian landholdings as at 30 June 2022 were valued at $173,200,000. 

The February acquisition

On 18 February 2022, when there were approximately 3,916 members of FSREC, the responsible entity simultaneously redeemed units held by existing members and issued to ISPT new units equivalent to a 75.8% interest in FSREC. 

It was not in dispute that at the time of the February acquisition, FSREC was a public unit trust scheme within the meaning of the Duties Act as it had at least 300 unitholders and no unitholder held more than 20% of its units. Accordingly, the February acquisition did not constitute a "relevant acquisition" within the meaning of section 78(1) of the Duties Act, as the interest acquired was below the 90% threshold for a "significant interest" in a public unit trust scheme.

As a result of the February acquisition, FSREC ceased to be a public unit trust scheme and became a private unit trust scheme as ISPT held more than 20% of its units such that it was no longer a “widely held trust”.

The July acquisition

On 22 July 2022, the responsible entity simultaneously redeemed 48,045,278.61 units held by existing members (excluding ISPT) and issued the same number of new units to ISPT, equivalent to a further 19.46% of the total units on issue. 

After completion of the July acquisition, ISPT held 95.26% of the units in FSREC. 

The Commissioner’s assessment and ISPT’s objection 

ISPT did not lodge any statements in respect of the February acquisition, but on 15 August 2022 lodged a landholder acquisition statement in respect of the July acquisition. ISPT estimated that the duty payable on the July acquisition was $2,190,806.80 and paid that amount. 

On 3 April 2023, the Commissioner issued an assessment for duty of $10,684,371 calculated on the cumulative 95.26% interest acquired in the February and July acquisitions, along with market interest of $210,361.15. The Commissioner remitted penalty tax in full on the basis that ISPT had taken reasonable care to comply with its obligations under the Duties Act, including by seeking professional advice and making full disclosure of the July acquisition within the statutory timeframe.

ISPT objected to the assessment by a Notice of Objection dated 31 May 2023, which was disallowed by the Commissioner's delegate by letter dated 27 November 2024. By a letter dated 15 January 2025, ISPT requested that the Commissioner treat the objection as an appeal and cause it to be set down for hearing in this Court, pursuant to section 106(1)(a) of the Taxation Administration Act 1997 (Vic).

Relevant statutory provisions

Section 77 of the Duties Act provides that a liability for duty arises when a relevant acquisition is made. 

Section 78 defines "relevant acquisition".  In summary: 

• a person makes a relevant acquisition if they acquire an interest in a landholder that is of itself a “significant interest”. The threshold for a "significant interest" differs depending on the nature of the landholder, being 20% or more in the case of a private unit trust scheme, 50% or more in the case of a private company or wholesale unit trust scheme and 90% or more in the case of a listed company or public unit trust scheme: under s 78(1)(a)(i) and 79.
• a relevant acquisition is made where an interest acquired amounts to a significant interest when aggregated with other interests in the landholder acquired by the person, an associated person, or any other person in an associated transaction: s 78(1)(a)(ii).
• a relevant acquisition is also made where, after an interest referred to in section 78(1)(a) was acquired, the same person (or an associated person, or any other person whose interest was aggregated under section 78(1)(a)(ii)) acquires a “further interest” in the landholder: s 78(1)(b).

Section 86 sets out the amount of duty chargeable in relation to a relevant acquisition. Relevantly, where an acquisition is of a “further interest” under section 78(1)(b), duty is charged under section 86(4) on an incremental basis on the further interest acquired as opposed to on the aggregate amounts calculated under section 86(3). 

Issue 1: Was the July acquisition a ‘further interest’ under s 78(1)(b), or was it to be aggregated with the February acquisition under s 78(1)(a)(ii)?

ISPT's argument

ISPT contended that upon completion of the February acquisition, FSREC became a private unit trust scheme and ISPT thereby held a significant interest in the landholder (being more than 20% in a private unit trust scheme). ISPT argued that, because it already held a significant interest in FSREC at the time of the July acquisition (by virtue of the February acquisition converting FSREC into a private unit trust scheme in which a 20% or more interest is significant), the July acquisition was therefore the acquisition of a "further interest" within the meaning of section 78(1)(b). 

ISPT submitted that section 78(1)(b) does not require the prior interest referred to in section 78(1)(a) to have itself constituted a "relevant acquisition" and as such a person who already holds a significant interest cannot, by acquiring more units, be said to be acquiring a significant interest (which it already holds); such a subsequent acquisition can only be a "further interest" under section 78(1)(b). 

The Commissioner's position

The Commissioner submitted that section 78(1)(b) can only operate where a person has first already made a relevant acquisition under section 78(1)(a). An acquisition of a "further interest" under section 78(1)(b) requires a prior acquisition that was itself of a significant interest.

The Court's reasoning

Nichols J accepted the Commissioner's construction and dismissed the appeal for the following reasons:

• Statutory text and structure: the legislative scheme of Division 2 of Part 2 of Chapter 3 of the Duties Act is structured around the concept of a "relevant acquisition". The charging provision in section 77, as well as section 78 which sets out when a relevant acquisition occurs, is premised on the concept of an “acquisition”, not “holding”. The statutory question is not whether the taxpayer holds a significant interest at the time of the asserted further acquisition, but whether, before the further acquisition, an interest referred to in section 78(1)(a) was acquired. 
• Policy and statutory purpose: construing section 78 in the manner put forth by ISPT would result in a taxpayer who incrementally acquires a 95.26% interest having only 19.46% of that acquisition taxed. The Court could not see this as advancing the statutory purpose of the landholder duty provisions. For the purposes of landholder duty, the acquirer must take the entity as it finds it. It was not relevant that had a single acquisition been made at a different time, i.e. when FSREC was a public landholder, the tax treatment would have been more favourable to ISPT. 

Conclusion on Issue 1

The Court accepted the Commissioner's construction that where a person makes a subsequent acquisition in a landholder at a time when that person has not previously made a “relevant acquisition”, it will be a relevant acquisition under s 78(1)(a)(ii) of the Duties Act if, when aggregated with the earlier-acquired interest, it reaches the acquisition threshold applicable to the landholder at the time the second interest is acquired.

As the February acquisition was not a “relevant acquisition”, the July acquisition cannot have been an acquisition of a “further interest” under section 78(1)(b). As such, the Commissioner did not err in aggregating the July acquisition with the February acquisition and charging duty on the aggregated 95.26% interest under s 78(1)(a)(ii). 

The decision confirms that the landholder duty provisions of the Duties Act operate on the basis of acquisitions, not mere holdings. Investors who structure transactions in stages must be alert to the risk that, at the time of a subsequent acquisition, the applicable duty threshold and the aggregation rules may combine to produce a significantly larger duty liability than was anticipated at the time of the first acquisition. 

Issue 2: The “Landholder status” issue

As a separate matter, the Court also considered whether the change in FSREC from a public to a private unit trust scheme caused by the February acquisition was to be assessed before or after completion of that transaction. That is, because the February acquisition caused FSREC to cease to be a ‘public unit trust scheme’, should that have been taken into account in determining the duty consequences of that acquisition. If that approach was adopted, then the February acquisition would have been independently dutiable as an acquisition of 20% or more of a ‘private unit trust scheme’.

The Court's reasoning

The Court confirmed that, in determining the duty consequences of an acquisition of interests in a landholder, the better construction is that one considers only the interest acquired and not the effect that the acquisition has on the nature of the landholder. The status of the landholder is to be assessed before completion of the relevant acquisition.

The Court's principal reason for adopting this construction was that the alternative — taking into account the effect of an acquisition on the landholder's status — would render s 79(2)'s definition of "significant interest" in a public unit trust scheme (requiring a 90% interest) effectively redundant. If the alternative construction were correct, any acquisition of more than 20% of a public unit trust scheme would cause it to become a private unit trust scheme, such that the 90% threshold would never practically apply. That outcome is plainly inconsistent with the statutory scheme.

Conclusion on Issue 2

Both parties submitted, and the Court agreed, that the better construction was that, in determining the duty consequences of an acquisition, the only relevant consideration is the interest acquired and not the effect that the acquisition has on the nature of the landholder. The status of the landholder was to be assessed before completion of the February acquisition. This conclusion provides comfort to taxpayers that transactions which cause a concessional status to be lost, will not result in adverse duty implications except where the Duties Act expressly provides for that outcome (e.g. transactions in connection with the revocation of wholesale unit trust status (s 89X(3)(c)).