Madison Marcus | State Taxation Acts Amendment Bill (Victoria) - Madison Marcus

State Taxation Acts Amendment Bill (Victoria)

The State Taxation Acts Amendment Bill 2019 was introduced on 28 May 2019. Relevant to developers are the significant changes to the acquisition of economic entitlements under the Victorian Duties Act 2000 in response to the Victorian Supreme Court case of BPG Caulfield Village Pty Ltd v CSR [2016] VSC 172 which found that the economic entitlement provisions of the Duties Act operated more narrowly than the Commissioner of State Revenue (Commissioner) previously contemplated.


The Duties Act 2000 currently contains ‘economic entitlement’ rules within its landholder duty provisions, which can apply to development agreements entered into between a private landholder (company or unit trust) and a developer.

Under a typical development agreement, the developer will be entitled to charge the landowner for the development costs incurred and might be entitled to a margin on those costs and/or a share of the profit derived from the development.

The profit component of the developer’s remuneration falls within the definition of ‘economic entitlement’. That definition also includes participation in the dividends or income of the landholder, participation in the income or rents derived from the land holdings of the landholder, or participation in the capital growth or proceeds of sale of the land holdings.

Under the current rules, provided the total economic entitlement(s) of the developer equate to an interest of less than 50%, duty is generally not payable on the arrangement.

In BPG Caulfield Village Pty Ltd v CSR, the Court held that an entity will not acquire an economic entitlement pursuant to the Duties Act where it acquires a right to benefit from some, but not all, of the land holdings of a landholder. The Court also found that, even where an economic entitlement has been acquired, landholder duty will only apply where that economic entitlement constitutes an interest of 50 percent or more of the value of all of the relevant land holdings of a landholder (instead of that portion of the land holdings that the entity acquired an interest in).

Proposed Changes:

If the Bill passes, the new economic entitlement provisions will significantly broaden the scope of land development arrangements that will attract stamp duty.

This is because the Bill removes the 50% threshold for the interest acquired under the economic entitlement(s) and provides that the economic interest is deemed to be 100% if:

  • the agreement does not specify the percentage of the economic entitlement acquired;
  • the agreement specifies that percentage but also includes other amounts payable; or
  • the agreement entitles the person or their associate to two or more types of economic entitlements.

What this could mean for you:

Hopefully the Bill does not pass in its current form but if it does it could be as soon as next week. If you have a Victorian development agreement that needs review or for further information please contact our Victorian Property and Commercial Team:

Elizabeth Chase- Partner
Property & Commercial – Victoria


P: + 61 3 9098 8643

Denis Hall – Director
National Head of Property


P: +61 2 8022 1222


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