News and Insights

We are generally alert to landholder duty arising from acquisitions of shares in companies and units in unit trusts. However, a less obvious trap is that duty may also arise where a person merely acquires control over a private landholder. As the Supreme Court of Victoria confirmed in Tao v Commissioner of State Revenue [2025] VSC 831 (Tao), merely acquiring shares in and / or being appointed as the sole director of a trustee company of a unit trust is sufficient to constitute a dutiable acquisition of control in Victoria.\

In Tao’s case, the taxpayer acquired all of the shares in the company acting as trustee of a unit trust (the Unit Trust) and was appointed as the sole director of that trustee company. The taxpayer owned a 60 percent stake in a company that owned 25 percent of the units and as such, had an indirect interest in the Unit Trust of 15 percent.

The trustee, in its capacity as trustee of the Unit Trust, owned real property with a value in excess of $1 million and was therefore a landholder. The taxpayer was assessed for landholder duty on the basis that he had made a relevant acquisition by means of an acquisition of control over a landholder under section 82 of the Duties Act 2000 (Vic) (the Act).

Where a person acquires direct or indirect control over a private landholder within a 3-year period (except by an otherwise dutiable transaction), subsection 82(1)(a) of the Act states that the person is taken to have made a relevant acquisition in the landholder of 100%. However, under subsection 82(1)(b) of the Act, the Commissioner has the discretion to determine that the person is taken to have made a relevant acquisition in the landholder of a lesser percentage that the Commissioner considers appropriate in the circumstances.

In Tao, the taxpayer appealed to the Victorian Civil and Administrative Tribunal (VCAT), which determined that the taxpayer had obtained control of the Unit Trust for the purposes of section 82 of the Act when he became the sole director and sole shareholder of the trustee company and that he was therefore liable to pay landholder duty. However, VCAT took into account the taxpayer’s existing interest in the unit trust and stood in the shoes of the Commissioner and exercised his discretion to reduce the deemed acquisition from 100 percent to 85 percent.

Unhappy, the taxpayer then sought leave to appeal to the Supreme Court of Victoria, arguing that there was no change in beneficial interest when he became the sole director and shareholder of the trustee company. However, the Supreme Court held that section 82 of the Act provides for acquisition of control as a separate class of relevant acquisition and that the concept of change in beneficial ownership is not relevant to that class of relevant acquisition. As such, leave to appeal was refused.

The case of Tao serves as a warning that care should be taken when considering any of the following actions:

• appointing one or more new directors of a private company, where that private company owns real property with a value of $1 million or more;
• appointing one or more new directors of a company acting as trustee of a private unit trust, where that company (in its capacity as trustee of the trust) owns real property with a value of $1 million or more; and / or
• adding or removing shareholders of a company acting as trustee of a private unit trust, where that company (in its capacity as trustee of the trust) owns real property with a value of $1 million or more.

If you are considering any of the above actions, please contact us to discuss your options, to ensure that no unintended duty consequences arise.