A taxpayer has been unsuccessful before the Victorian Civil and Administrative Tribunal in a matter concerning the Victorian land rich provisions.
The matter concerned an assessment issued to the taxpayer in February 2011 for $5.2m (which comprised $3.8m in duty, $937,775 in penalties, and $488,993 in interest). For the purposes of the proceedings, the taxpayer was acting in its capacity as trustee for a property fund (DPF). The assessment treated the taxpayer’s acquisition of all units in 3 public unit trust schemes (referred to as “the Syndicates”), in consideration of the allotment of units in the property fund to the transferring unit holders, as “relevant acquisitions” on the basis of the then s89E of the Duties Act 2000 (Vic). That section deemed each Syndicate to be a “private unit trust scheme” immediately prior to the acquisition of the units.
The Tribunal confirmed the assessment save for the issue of penalty, which it held was not payable under s30(3) of the Taxation Administration Act 1997 (Vic). It held the first Syndicate was a land rich holder at the time of the relevant acquisition, and that the then s89E applied. It also held that neither the full or partial exemption under the then s85(2) of the Duties Act applied.
(Denison Funds Management Ltd v Comr of State Revenue (Review and Regulation) [2014] VCAT 1385, Victorian Civil and Administrative Tribunal, Davis SM, 5 November 2014.)
[LTN 224, 19/11/14]
s85(2) of the Duties Act – Who is liable to pay the duty?
(1) The following are jointly and severally liable to pay duty chargeable under this Part—
(a) the person who makes the relevant acquisition; and
(b) the landholder or, if the landholder is a unit trust scheme, the trustee of the landholder; and
(c) if the relevant acquisition results from an aggregation of the interests of the person referred to in paragraph (a) and other persons—each of those other persons.
(2) A person, other than a person referred to in subsection (1)(c), may recover as a debt from the person who made the relevant acquisition or a person referred to in subsection (1)(c) the amount of any duty chargeable under this Part and any penalty paid by the first person in respect of that duty.
S89E of the Duties Act – Duty concession: anomalous duty outcome
(1) Subject to subsection (3), this section applies to a relevant acquisition if the Commissioner, having regard to all the facts and circumstances, is satisfied that—
(a) the application of this Part results in an anomalous duty outcome; and
(b) the duty payable under this Part is greater than the duty that would be payable under Chapter 2 had the subject of the relevant acquisition been a transfer of the land of the landholder to the person.
(2) The Commissioner may reduce the duty payable to an amount not less than the duty that would be payable under Chapter 2, had the subject of the acquisition been a transfer of the land of the landholder to the person.
(3) This section does not apply to a relevant acquisition that is the acquisition of an economic entitlement under section 81 or the acquisition of control under section 82.