Capital raisings – VCAT decision puts spotlight on landholder duty risks

5 minute read  19.06.2023 James Hamblin, Nathan Deveson, John Riley

VCAT's recent decision on landholder duty increases risk and uncertainty for capital raisings.

A recent decision of the Victorian Civil and Administrative Tribunal (VCAT) on landholder duty may have significant implications for capital raisings, particularly in the real estate funds industry. The decision heightens the risk of duty being imposed on a much broader range of capital raisings than many in the industry have anticipated to date.

Landholder duty – an overview


  • a company or unit trust will be a 'landholder' for the purposes of state or territory duties legislation if it holds, either directly or indirectly through interposed companies, partnerships or trusts, interests in land with a market value that equals or exceeds a certain threshold (e.g. $1m in Victoria). Relevant interests in land are not limited to freehold land and items fixed to land, but can include leases and other types of interests (e.g. mining tenements). Importantly, an entity can also be deemed to be a landholder in certain circumstances where it (or a subsidiary) holds uncompleted agreements or options over land; and
  • where an investor acquires an interest in a landholder, generally no landholder duty will arise in respect of that acquisition unless the investor acquires (or commences to hold) an interest that meets or exceeds a certain percentage threshold in the landholder entity (this is generally 50%, however it can be as low as 20% in the case of private unit trusts for Victorian landholder duty purposes). Importantly however, the relevant percentage is to be calculated by including interests acquired or held by:
    • associated / related persons of the investor (this concept being broadly defined in each state and territory's duties legislation); and
    • other investors in an 'associated transaction' (in the Victorian context, this concept involves either persons acting in concert or 'acquisitions which form, evidence, give effect to or arise from substantially one arrangement, one transaction or one series of transactions').

The Oliver Hume decision

In Oliver Hume Property Funds (Broad Gully Rd) Diamond Creek Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 634, Judge Macnamara (sitting as Vice President of VCAT) handed down a decision which focuses on the 'substantially one arrangement' test outlined above.

In short, the Victorian Commissioner of State Revenue (Commissioner) was successful in arguing that subscriptions for shares in a landholding company by 18 separate investors were to be aggregated such that Victorian landholder duty was to be assessed by reference to the total percentage acquired in the company by all 18 investors. That is, the separate investors' acquisitions were aggregated on the basis that they were treated as occurring as part of 'substantially one arrangement'. This was despite the investors being unrelated and genuinely acting independently of one another – essentially their only connection was that:

  • they dealt with the same issuer around the same time in accordance with the terms set out in a widely circulated information memorandum; and
  • each transaction was interdependent in so far as the transactions would only occur if a target total of subscription proceeds was met.

Accordingly, notwithstanding that each investor individually acquired an interest in the company below the applicable landholder duty threshold (in this case 50%), it was held that duty was validly assessed by reference to the aggregate of all interests acquired (in this case 99.99%). In this case a duty assessment was issued to the landholder company, however note that in Victoria (like various other jurisdictions) the investors themselves are jointly and severally liable for such duty and the landholder entity can seek to recover the landholder duty charged as a debt from the relevant investors.


The decision arguably means that almost any capital raising which equates (in aggregate) to an interest equal to or greater than the relevant landholder duty threshold (i.e. 20% for Victorian private unit trusts and generally 50% for other landholders) will result in duty payable. For completeness, capital raisings conducted on a purely pro rata basis (i.e. where there is no change in any investor's percentage interest) remain exempt from landholder duty.

While the facts involved an information memorandum that was not regulated by the Corporations Act 2001 (Cth) and was not required to be lodged with the Australian Securities and Investments Commission (ASIC), the decision casts doubt on whether administrative concessions given by the Victorian State Revenue Office to date in the context of product disclosure statements or prospectuses lodged with ASIC will be applied by a tribunal or court. The industry has (until now) taken comfort from Revenue Ruling DA.057 in which the Commissioner states that he:

'has taken the position that he will not regard acquisitions of interests by independent members of the public as an associated transaction if the acquisitions are made in response to a genuine public offer under a product disclosure statement or prospectus lodged with the Australian Securities and Investments Commission.'

However in the decision Judge Macnamara noted that this ruling is not binding and said 'there is no provision which would appear to authorise the Commissioner to offer this concession'.

It is therefore unclear whether the Commissioner will still apply his position in the ruling to genuine public offers under a product disclosure statement or prospectus lodged with ASIC. It is also unclear how Revenue Offices outside of Victoria will respond to the decision.

It is possible that the taxpayer may appeal the decision and therefore this must continue to be monitored.

In light of the above, we recommend that stamp duty advice is sought on all current or proposed capital raisings, whether or not the offering document is to be lodged with ASIC.

Please reach out to our team if you would like to discuss the potential implications of this important decision.