HOMELandholder duty
Landholder duty
You may be liable for landholder duty when you acquire shares or units in a company or unit trust which owns land (‘landholder’).
A landholder is a unit trust scheme or a private or a publicly listed company that holds land (‘landholdings’) in NSW with an unencumbered value of $2 million or more.
A landholding is an interest in land other than the estate or interest of a mortgagee, charge or other secured creditor.
An interest in land includes an interest in anything fixed to the land regardless of whether such items are considered fixtures at common law.
A liability for landholder duty arises when you make a ‘relevant acquisition’.
The following persons are jointly and severally liable to pay landholder duty:
The person who makes the relevant acquisition
The landholder or the trustee of the landholder
If the acquisition results from an aggregation of the interests, each of those other persons
Any liability to pay duty, interest or penalty tax is a charge on the land holdings of the landholder or trustee.
A relevant acquisition occurs when you acquire an interest that:
is a ‘significant interest’
when aggregated with other interests held by you or an associated person amounts to a significant interest
is a significant interest, and a further interest is acquired
when all interests that are essentially one arrangement between multiple acquirers are aggregated, form a significant interest.
A significant interest means, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, you are entitled to:
50 per cent or more of the property in a ‘private landholder’, or
90 per cent or more of the property in a ‘public landholder’.
Acquiring a significant interest does not have to occur in one event. For instance, if you already hold a 45 per cent interest in a landholder and then acquire another five per cent, you may be liable to pay landholder duty.
You can acquire an interest in a landholder in various ways, including:
the purchase, gift or issue of a unit or share
the cancellation, redemption or surrender of a unit or share
the removal, cancellation or alteration of a right for a unit or share
the capacity in which you hold an interest in the landholder changes, e.g. from a trust to an individual.
Linked entities
Companies and unit trusts can hold land and property in their own right, or they can hold an interest via linked entities.
A linked entity is a chain of entities – such as companies, unit trusts or partnerships – that are each entitled to the others’ property if it is distributed.
For linked entities, either one or both of the following apply.
At each link between two entities, one would receive at least 50 per cent of the value of the other’s property if it is distributed.
If all of the entities’ property other than the principal’s were to be distributed, the principal entity would be entitled to at least 50 per cent (for private landholders only).
The value of a linked entity’s interest is the portion of unencumbered value the company or unit trust would be entitled to if each entity was wound up.
Where the landholder is the beneficiary of a discretionary trust, any land or property it owns are considered to be interests of the landholder.
Surcharge Purchaser Duty
If you are a foreign person, and you have made a relevant acquisition in an landholder that has an interest in residential land, you may also need to pay Surcharge Duty in addition to landholder duty.
Make a payment
Duty must be paid within three months of the acquisition.
The following persons are jointly and severally liable to pay landholder duty:
The person who makes the relevant acquisition
The landholder or the trustee of the landholder
If the acquisition results from an aggregation of the interests, each of those other persons
Where an interest in a landholder is acquired or held by a bare trustee for another person, the interest is taken to have been acquired by the ultimate beneficial owner.
The ultimate beneficial owner must pay the duty on a relevant acquisition made as a result of combining all interests held by the ultimate beneficial owner or associated person.
Failure to pay duty on time will result in the imposition of interest. Penalty tax may also be applied.
Exemptions and concessions
Below is a selection of exemptions and concessions from Chapter 4, Part 4 of the Duties Act 1997.
Exempt acquisitions
Exempt acquisitions may include:
1 corporate reconstructions (s 273A of the Duties Act 1997 and Revenue Ruling DUT 026)
2 trustee changes (s 54(3) of the Duties Act 1997 and Revenue Ruling DUT 037)
3 where the interest acquired is as a result of the will of a person who has died (s 63 of the Duties Act 1997).
For exempt acquisitions, made on or after 24 June 2020, complete and lodge an Exempt Acquisition Statement: Acquisition of an Interest in a Landholder (ODA 047) (PDF, 347 KB) within three months of your acquisition.
For a relevant acquisition made before 24 June 2020, email your request for the appropriate form.
Concessions for primary producers
A primary producer is a landholder whose landholdings, anywhere in the world, wholly or predominantly comprise land used for primary production.
If you acquire an interest in a ‘primary producer’, you must complete and submit an Acquisition Statement: Acquisition of an Interest in a Primary Producer (ODA 043C) (PDF, 495 KB) within three months of your acquisition.
Duty will not be charged in respect of an acquisition of an interest in a primary producer if, when the acquisition is made, the primary producer:
1 has landholdings in NSW with an unencumbered value of less than $2 million, and
2 its landholdings, anywhere in the world, make up less than 80 per cent of the unencumbered value of all its property.
If the landholder stops being a primary producer at any time within five years of the acquisition, the concession is withdrawn and duty will be charged on the date when the landholder stopped being a primary producer.
