Double Duty - the Dangers of Land Development before Nomination

Property Law: 15 January 2024

Author: Robert Bradley - Our People

In Hartman v Commissioner of State Revenue [2022] VCAT 28 The Tribunal affirmed the Commissioner’s assessment of “double duty” in circumstances where the named purchaser sought a planning permit to subdivide the property before nominating two companies (as trustees of trusts associated with him) to take one title each at settlement.

There is nothing unusual in that finding. In Victoria, double duty is likely to be payable where:

1. there is any form of “land development” by the named purchaser before nominating (“land development” is defined so as to include applying for a permit); or
2. the ultimate transferee provides any additional consideration.

The taxpayer contested the assessment on three grounds:

1. that the purchase money was provided by the trustees but the Tribunal held that section 34(b) of the Duties Act 2000 applies only to Transfers, not nominations;
2. that section 36 exempted Transfers from a trustee to a beneficiary under a fixed trust but again the Tribunal held that the section applies only to Transfers; and
3. that the Commissioner’s statutory discretion should have been exercised to exempt the transaction but the Tribunal considered that it did not have the ability to review the manner in which that discretion had been exercised.

To avoid double duty:

• endeavour to identify the ultimate purchaser before signing the Contract of Sale; and
• seek legal advice before attempting to rely on nomination clauses.

Robert Bradley, Principal Lawyer (rbradley@aitken.com.au) has many years of experience in Commercial and Property law and would be pleased to assist with your property matter.