Acquisition of control over private landholders and the Duties Act -Tao v Commissioner of State Revenue [2025] VSC 831

The proceedings concerned an assessment for landholder duty under the Duties Act 2000 (Vic) (Duties Act). The Commissioner of State Revenue, pursuant to the landholder provisions in the Duties Act, assessed the applicant (Tao) for duty and penalty tax and interest in respect of a relevant acquisition of a 100% interest by Tao in a private landholder. The duty assessment concerned an ‘acquisition of control’ acquired following Tao’s acquisition of issued shares in the corporate trustee of the landholder, being a private unit trust.  

Background

66 William Road Pty Ltd (Company) was trustee of the WCT Unit Trust (Trust). The Trust held a development property in Victoria valued above $1 million. The units in the Trust were held as follows:

• 50 units by Maclaw No. 547 Pty Ltd as trustee for The Mountain Highway Unit Trust

• 25 units by Fredco Incorporated Ltd as trustee for Nomsec No. 1 Ltd

• 25 units by Amber Investments Pty Ltd (Amber)

Tao was the majority shareholder in Amber, being the beneficial owner of 60% of the issued shares.

In 2014, Tao acquired the four shares on issue in the Company and became its sole director. It was this acquisition of shares and control of the Company that was alleged to be the dutiable transaction.

Proceedings

The Commissioner sought to uphold the assessment for landholder duty by contending that Tao made a ‘relevant acquisition’ for the purposes of section 82 of the Duties Act. Upon acquiring 100% of the shares in the Company and becoming the sole director, it was argued that Tao acquired the capacity to determine the outcome of decisions about the private landholder’s financial and operating policies for the purpose of section 82(2) of the Duties Act.

Duties Act

Pursuant to section 82 of the Duties Act, if a person within a three-year period acquires, directly or indirectly, control over a private landholder, then the person is taken to have made a relevant acquisition in the landholder of either 100% or a lesser percentage as determined by the Commissioner.

The Supreme Court held that Tao acquired control over the Trust by becoming the sole director of the Company. Thus, duty was applied to 100% of the underlying land. The Court considered that it was unclear that any interest, including beneficial ownership of the property, being acquired by Tao was relevant in the context of the landholder provisions.

The alternative argument is that the control of the Company does not confer any additional benefits upon Tao, as the entitlements to income and capital are determined by the unit holding of the Trust, rather than the shares of the Company. From this perspective, Tao’s ‘acquisition’ would not trigger the landholder duty provisions (prior to this matter).

The Court confirmed that ‘acquisition of control’, pursuant to section 82, does not involve notions of beneficial ownership. Rather, it is established where a person acquires the capacity to determine or influence the outcome of decisions about private landholder’s financial and operating policies.

As Tao became sole director of the Company after the acquisition of the shares, the Court was satisfied that Tao acquired control of the Trust.

This caused Tao paying 25% of duty on the initial acquisition and then 100% of duty on this additional ‘acquisition of control’.

Key Takeaways

When considering a change in control of a trustee of a landholder unit trust, the provisions of this case must be considered and greater planning is required when establishing these entities. If a party wishes to take control of trustee of a land rich unit trust, advisors should consider alternative methods of change of control (i.e. change of trustee, which may also be dutiable) rather than opting for the standard change of director and transfer of $1 shares.

For more information, please contact:

Alasdair Woodford
Principal
T: 03 5225 5217 | M: 0436 456 144
E: awoodford@ha.legal

Joseph Flanagan
Senior Associate
T: 03 5226 8504 | M: 0491 307 550
E: jflanagan@ha.legal

Tayla Berger
Senior Associate
T: 03 5226 8559 | M: 0407 825 365
E: tberger@ha.legal

This article was prepared with the assistance of Philippa Duniam, Law Clerk.