Landholder duty

What is Landholder duty?

A liability for Landholder duty occurs when a person or entity makes a relevant acquisition in a landholder.

Landholder duty is an equivalent tax to conveyance duty. Conveyance duty applies to the direct transfer of property ownership from one person or entity to another. Landholder duty is intended to tax indirect property transfers, such as, share transfers in a company that owns land in the ACT.

Who is a Landholder?

A landholder is an entity that has a landholding. An entity may be a private company or a private unit trust scheme.

What is a Landholding?

A landholding is any interest in land in the ACT, other than the interest of a mortgagee, charge or other secured creditor or a profit à prendre.

A landholder will include the entity who owns the legal title of the land. A landholder will also include an entity that constructively owns land through another entity (linked entity) who is the legal title holder of the land, if they would receive 50 per cent or more of the property if all the entities were wound up.

When does a liability occur?

A liability for Landholder Duty arises when a relevant acquisition is made. This occurs when a person or entity acquires an interest in a landholder that is:

What is a Significant Interest?

A significant interest occurs where a person or entity is entitled to at least 50 per cent of the distribution of property from the landholder on the winding up of the landholder or otherwise.

Linked Entities

In determining whether a company or unit trust is a landholder (and the amount of duty payable on a relevant acquisition), the company or unit trust’s land holdings are not limited to land directly held by the company or on behalf of the unit trust. In certain circumstances, they may include land constructively held by linked entities.

A private company or private unit trust’s entitlement to receive a distribution of property on a winding up of all relevant linked entities is based on a notional winding up of all the linked entities at the time of the relevant acquisition. An entitlement to receive a distribution of property is a reference to what it would receive as a proportional interest (not monetary figures) in the property of any of the linked entities.

What is Unencumbered Land Value?

The unencumbered value of land is different to the average unimproved value (which is the land value used for assessing rates).

Landholder duty is assessed on the unencumbered value of the property, which includes the land and fixtures (house), without reference to any restrictions or debts that lower the property’s value (mortgage, easements or covenants etc).

What is an Associated Person?

A person is associated with another person in the following cases:

Who is a Related Person?

A person is related to another person in the following cases:

What am I required to do?

Acquisition Statement

A person or entity who makes a relevant acquisition must lodge an acquisition statement not later than 90 days after the date of the relevant acquisition. A tax default occurs if Landholder Duty is not paid within 90 days of the relevant acquisition.

How is my Duty Calculated?

Value of Acquisition

Duty Payable

less than or equal to $1,500,000nil
More than $1,500,000A flat rate of $5.00 per $100 applied to the total acquisition value

Value of Acquisition

Duty Payable

up to $200,000$20 or $0.70 per $100 or part thereof, whichever is greater
$200,001 to $300,000$1,400 plus $1.20 per $100 or part thereof by which the value exceeds $200,000
$300,001 to $500,000$2,600 plus $1.90 per $100 or part thereof by which the value exceeds $300,000
$500,001 to $750,000$6,400 plus $2.39 per $100 or part thereof by which the value exceeds $500,000
$750,001 to $1,000,000$12,375 plus $3.15 per $100 or part thereof by which the value exceeds $750,000
$1,000,001 to $1,499,999$20,250 plus $3.40 per $100 or part thereof by which the value exceeds $1,000,000
$1,500,000 and overA flat rate of $5.00 per $100 applied to the total acquisition value

Duty is payable at the determined rate on the amount calculated by multiplying the unencumbered value of all landholdings of the landholder in the ACT as at the date of the relevant acquisition, by the proportion of the value represented by the interest acquired in the relevant acquisition.

Who is Liable to Pay?

The person who makes the relevant acquisition is required to pay duty. If the relevant acquisition results from an aggregation of interests of associated people, the person who made the relevant acquisition and the associated person or people are jointly and severally liable for payment of duty.

Am I Exempt?

In some circumstances, you may be eligible for an exemption from landholder duty, such as:

Further details of exemptions can be found in Chapter 3 Part 3.7 and Chapter 11 of the Duties Act 1999 (ACT).

Deceased Estates

If you have received property from a deceased estate ‘in conformity’ with the trusts contained in the will or arising on intestacy.

Beneficiary of the will

"In conformity" means you’re entitled to the property as the beneficiary (inheriting money or other property) either

If a will is contested, the duty chargeable will be determined based on any court orders made. This is because a court order acts as an addition (codicil) to the will, any transfer made under the orders is considered to be a transfer in accordance with the terms of the will of the person who has died.

Transfers not in conformity to the will

The beneficiaries of a will often decide to vary their entitlements.

For instance, one beneficiary may decide to gift or sell part of a property they inherit to another beneficiary. When this happens, the normal rate of transfer duty applies to any part of the property receives that varies from the terms of the will.

If you vary the entitlements under a will this way, you must provide a valuation report as evidence of the value of the property. This is for the purposes of assessing the liable duty.

Here is an example of how transfer duty applies when you vary the terms of the will.

Example

Under the terms of the will, equal shares in the family company are left to John and Lisa by their parent.