If you hold Victorian real estate through a unit trust and are considering transferring units—perhaps as part of an estate plan, SMSF wind-up, or asset restructure—be warned: you may inadvertently trigger landholder duty under Victoria’s Duties Act 2000. A recent bulletin from the Legal Practitioners’ Liability Committee (LPLC) and the Oliver Hume case provide timely reminders of how these rules apply and why careful planning is essential.
What is Landholder Duty?
Landholder duty applies where a person acquires a “significant interest” in a landholder—that is, a company or unit trust that directly or indirectly holds Victorian land valued at $1 million or more. In the case of private unit trusts, a significant interest generally means acquiring 20% or more of the trust. Importantly, the value threshold is based on the total unencumbered value of land held, not just the value of the units transferred.
Why It’s a Trap for the Unwary
Landholder duty can apply even if:
- The transfer is between family members or beneficiaries.
- There is no cash consideration (e.g., a gift or in-specie distribution).
- The transaction is part of a broader estate or superannuation wind-up.
As highlighted in the Oliver Hume decision, the courts will consider whether multiple acquisitions are part of a single arrangement or a series of associated transactions, even if the parties are unrelated. The result: multiple seemingly innocuous transfers can be aggregated to exceed the 20% threshold, triggering duty.
Key Takeaways
- Know your trust’s land value. If your unit trust holds land worth $1 million or more, any unit transfer is potentially dutiable.
- Duty may apply even if there’s no sale or commercial intent.
- Lack of awareness is no defence. The SRO may audit historical transfers and impose duty, penalties, and interest.
- Until 30 June 2025, the SRO is offering a penalty tax amnesty for voluntary disclosures relating to capital raisings and acquisitions in landholders.
Final Word
If you are planning to transfer units in a trust that owns Victorian land, seek legal advice early. Timing, documentation, and transparency are critical. What seems like a routine restructure or inheritance distribution may be anything but—and landholder duty could significantly alter your bottom line. Feel free to contact our office for a preliminary assessment and quotation