Two Bites, One Bill: Subsequent Acquisitions Deemed Subsequently Dutiable – Lessons from ISPT v CSR

A public unit trust scheme (PUTS) is a managed investment structure where the beneficial interest is divided into units and held by a group of public investors. The units are widely held and publicly offered (i.e. listed on the ASX). To maintain its status as a PUTS, a unitholder cannot hold more than 20% of the units on issue.

In ISPT Pty Ltd as trustee for ISPT Retail Property Trust v Commissioner of State Revenue [2026] VSC 480, the Fort Street Real Estate Capital Fund (Fund) comprised of three stapled unit trusts which held land worth approximately $173 million.

ISPT Pty Ltd (Appellant) acquired units in the Fund across two transactions, one that occurred in February 2022 (First Acquisition) and one in July 2022 (Second Acquisition). The Commissioner assessed the Appellant with landholder duty on the combined interest, resulting in a duty assessment of over $10 million. The Appellant objected to this assessment.

Background

Pursuant to the Duties Act 2000 (Vic) (Act), duty is chargeable on transfers of dutiable property (relevantly, units) where a person acquires a significant interest in the landholder. According to section 79 of the Act, a landholder that is a PUTS will acquire a ‘significant’ interest in the landholder if 90% or more of the property is distributed.

The First Acquisition

In the First Acquisition, the Appellant acquired 75.8% of the units on issue, clearly less than the 90% threshold required for an acquisition of a ‘significant’ interest. The First Acquisition was not subject to landholder duty at the time of acquisition.

However, it did mean that the unit trusts investing in the Fund were no longer a PUTS as the Appellant was the registered holder of more than 20% of the units on issue. The Supreme Court confirmed that the landholder duty outcome is not impacted by a change in status of the PUTS to a private unit trust due to the acquisition of units.

The Second Acquisition

In the Second Acquisition, the Appellant acquired 19.46% of the units on issue. The Appellant argued that the First Acquisition was not subject to landholder duty but it became a significant interest holder after the Fund ceased to be a PUTS. Therefore, the Second Acquisition was an acquisition of further interest in the Fund and only subject to duty on the percentage acquired (less than 20%).

The issue was whether the Commissioner could impose duty on the aggregate amount of the First Acquisition and the Second Acquisition (which totalled 95.26%).

The Outcome

The Supreme Court held that the Commissioner was able to impose duty on the aggregate amount. The Court confirmed that if a person makes an acquisition of an interest in a landholder it will be deemed a ‘relevant acquisition’ if, at the time, the acquisition reaches the applicable threshold (i.e. 90%). If the person makes a subsequent acquisition and, upon aggregation, the acquisition reaches the threshold, duty will be assessable on the aggregated amount.

Lessons for Taxpayers

This case demonstrates that a taxpayer cannot rely solely on the fact that it subsequently holds a significant interest in a landholder to invoke the ‘further interest’ provisions and avoid aggregation of acquisitions of interest. The Court confirmed that the Act focuses on acquisitions, rather than simply the interests a taxpayer holds at a later point in time.

For more information in relation to landholder duty or other State Tax issues, 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

Jemimah Fitzgerald
Lawyer
T: 03 5225 5219
E: jfitzgerald@ha.legal

Prepared with the assistance of Pippa Duniam