Property Stamp Duty – Advisors tips and traps

At Danaher Moulton we give advice on or make over 100 duty Exemption Applications each year on:

1. Property Development deals
2. Acquisition of Property
3. Transfers of assets in and out of Trusts, SMSF’s
4. Asset protection Strategies
5. Division of assets in Estates
6. Complex High Netwealth Family Estate Planning.

Below are the common duty exemptions with tips and traps that you should consider.

If you are an advisor you need to know when duty may arise, otherwise a liability may fall on you. We have been instructed by 2 separate clients to sue 2 accountants for damages suffered because the clients were not properly advised in entering into the transaction (both involved the transfer of units/shares in land rich entities that triggered duty).

Starting Point with Duty Matters

1. With duty exemptions (and the application of duty generally), there are no grey areas. It is black and white. You get the duty exemption or you don’t. You trigger duty or you don’t.
2. If you are in doubt about whether duty may apply:
   
   1. Call us
   2. Don’t lodge an instrument for duty assessment if there is any doubt.
   3. Make application for a private ruling. Yes, additional costs apply but it could avoid significant liability.

Below I have set out common scenarios that attract duty and where a duty exemption may apply.

I have also pointed out the Tips and Traps that need to be considered.

Duty Scenarios

Companies, Trusts, SMSF’s

1. For duty to apply on the transfer of shares and units between Business Owners – the starting point
   
   1. The Entity must own property in Victoria
   2. The value of the property must exceed $1m (if under $1m, duty will not apply)
   3. For Companies – note the threshold is 50% or above
   4. For Unit Trusts – the threshold is 20% or above
   5. Trap – If a shareholder/unitholder already holds a significant interest – any acquisition by that shareholder/unitholder will trigger duty (even if the % acquisition is under the threshold)
   6. Trap – duty is payable if the shareholder/unit holder ends up with a significant interest when the acquisition is aggregated with any other interests acquired by them, or by an associated person, or by any other person as part of the same transaction or series of transactions.
2. A Transfer of assets between a Company and Shareholders
   
   1. There is no duty exemption available.
   2. Tip – If you can show that the Shareholder paid for the acquisition of the asset through their funds (not the Company’s) then an exemption may be available under S34
3. Unit Trusts – There is a duty exemption for a transfer of assets from a Unit Trust to a Beneficiary – Trap – it is more difficult than a Discretionary Trust transfer
   
   1. Property passing to a natural person unitholder absolutely | State Revenue Office (sro.vic.gov.au)
   2. Trap – The Unitholder cannot have acquired units after the property was purchased and get the duty exemption.
   3. The SRO needs to see the last 3 years financials
   4. No beneficiary loans can be forgiven
   5. When structuring a property deal where the investors take property instead of profits– a joint venture arrangement is easier from a duty exemption perspective than a Unit Trust transfer.
4. Family Trusts – there is an exemption for a transfer of assets from a Family Trust to a Beneficiary – Trap – it is not automatic
   
   1. Property passing to a beneficiary of a discretionary trust (where the beneficiary is not acting as trustee of another trust) | State Revenue Office (sro.vic.gov.au)
   2. Traps
      
      1. Beneficiary needed to be a beneficiary at the date the property was purchased
      2. Need to show the last 3 years financials
      3. Cannot forgive any beneficiary loan accounts
      4. Trust cannot be left in deficit after the property is removed
   3. Tip – the duty exemption is still available even if the Beneficiary refinances a loan connected with the Property (subject to meeting the criteria)
5. Limited Recourse Borrowing Arrangements
   
   1. Once a Loan is paid off, the Property can be transferred from the Bare Trustee to the SMSF
   2. Declarations of trust for land vested in an apparent purchaser | State Revenue Office (sro.vic.gov.au)
   3. Trap – the duty exemption is not automatic. You need to show all the funds were paid by the SMSF (you need accurate financial records)
   4. The bare trust deed must be lodged with SRO for stamping – no duty is payable if it can be shown the property is merely being held for the fund under a bare trust.
6. Change in Trustee – Unit Trust/Family Trust/Bare Trust
   
   1. Easiest of duty exemptions
   2. Trap – Preparing a Deed of Change of Trustee itself won’t change the title to the Property
   3. Change of trustee | State Revenue Office
7. SMSF’s
   
   1. SMSF – Member – There is a duty exemption on the transfer of property from an SMSF to a member – Property passing to beneficiaries of superannuation funds | State Revenue Office (sro.vic.gov.au)
      
      1. Trap – need to show the entitlement of the member and that the transfer of Property will not exceed their entitlement
   2. Member to SMSF – there is a duty exemption – Beneficiary transferring property to a trustee or custodian of a superannuation fund or trust | State Revenue Office (sro.vic.gov.au)
      
      1. Trap – also need to comply with Superannuation Laws
   3. SMSF – Members Estate
      
      1. Trap – there is no specific duty exemption on the transfer from an SMSF to the Member’s Estate – a duty exemption can be obtained but care is needed

Property

8. Change in shareholding/unitholding – Note if a company/unit trust signs a Contract to buy a property that is worth more than $1m – the company/unit trust is deemed to own the Property from the date of signing the contract. See S78.
   
   1. Trap – Any change in unitholding/shareholding after signing a Contract will attract duty consequences
   2. Tip – before buying – make sure you have your investors set up to buy the property
9. Nominations
   
   1. Tip – you must nominate under a Contract BEFORE you undertake any development – very broadly defined, including applying for a planning permit, building permit, having a plan of subdivision drafted
   2. Trap – double duty can be triggered by any land development activity occurring before nomination, regardless of who initiated it including tenants
   3. Tip – you must comply with the terms of the Contract when nominating.
   4. Tip – you can buy a property, then set up your intended purchasing entity – SMSF, Family Trust provided that there is no development/increase in payment when nominating.
   5. Sub-sales where there is no additional consideration (including parallel and building arrangements), no land development or no option | State Revenue Office (sro.vic.gov.au)
10. JV Arrangements
    
    1. Where 2 parties’ own multiple properties – ownership can be separated by partitioning the Properties – Partitions of land | State Revenue Office (sro.vic.gov.au)
    2. Tip – the value of the Property each party receives must not exceed their respective ownership proportion. If it does, duty will apply on the % above the proportion
    3. Tip – this is one of the easier duty exemptions
11. Apparent Purchaser Arrangements
    
    1. Where party A owns a property but Party B can show that they paid all money towards the property (ie mum and dad bought a property but child paid all costs associated with the purchase) then a duty exemption applies to transfer the property into the child’s name – Declarations of trust for land vested in an apparent purchaser | State Revenue Office (sro.vic.gov.au)
    2. Trap – accurate and complete financial records must be kept confirming all payments

Estates and Relationships

12. Matrimonial Home
    
    1. A duty exemption exists to transfer property between spouses on your Principal Place of Residence (PPR) Spouse and partner exemption | State Revenue Office
    2. Trap – no money can be payable between spouses
    3. Tip – when upgrading houses where the first property is maintained as a rental – a spousal transfer may need to be completed before completing the purchase of the new PPR
13. Deeds of Family Arrangements
    
    1. A duty exemption exists to transfer property to a beneficiary as part of their share in the estate other than in accordance with the Will Deceased estates – exemption – will and intestacy (broad accordance) | State Revenue Office
    2. Tip – the value of the Property must not exceed the entitlement under the Will. If it does, duty will apply on the % above the entitlement
14. Farm Exemption (little known exemption) – Family farm exemption | State Revenue Office
    
    1. Trap – both parties must be natural persons
15. Estate Claim Exemptions (transfers from estates not straight forward)
    
    1. Deceased estates – exemption – a transfer made to a beneficiary pursuant to a maintenance order by the Supreme or County Court | State Revenue Office (sro.vic.gov.au)
    2. Trap – if the parties agree a settlement (not Court ordered) the duty exemption wont apply.

Land Tax and Vacant Residential Land Tax – Reasons to transfer Property

You will have clients whose land tax bills have skyrocketed in the last year. In 2025, many properties will attract Vacant Residential Land Tax (VRLT) for the first time. We have assisted a record number of clients over the last 12 months to reduce their land tax costs by objecting to current and previous year’s assessments, on the basis of exemptions, valuations, and characterisation of property for land tax purposes.

We can advise on the best way to minimise VRLT moving forward, whether it be by advising on the required use of the property in order to avoid the VRLT, application of exemptions, or transferring property to other entities (and whether it’s possible to take advantage of any of the duty exemptions mentioned for these purposes).

Summary

Duty exemptions are complicated. To help guide you and your clients please contact Elizabeth Linedale or Dennis Danaher.