IN SUMMARY:
It is important to be aware of how the Landholder Duty rules across Australia differ and how they could impact your capital raising structure. Always get advice from experts
When structuring a property investment fund and the purchase of assets for it, stamp duty is always a key consideration. The stamp duty rules in the different States and Territories can be a confusing minefield and great care (and expert advice) is always needed when navigating through them.
“Landholder Duty” (or its equivalents, for example, “Trust Acquisition” duty in Queensland) is the stamp duty regime which can apply to trusts and companies with an interest in property. It would of course be helpful if the rules were consistent across all of the States and Territories. Unfortunately, however, they aren’t. For example, there are different minimum land holding thresholds (before duty may become payable), different unitholding acquisition thresholds and some other variances.
A general rule of thumb
When you have a new property fund conducting its first capital raising, from a duties perspective, it is preferrable (and in many instances, critical) to ensure all units in the fund are issued to your investors upfront, before the fund has purchased (or has entered into a contract to purchase, or has been nominated as purchaser, under a nomination clause) any property. Sometimes, for various reasons, that may not be possible. In these instances, the need to get expert guidance and advice becomes even more critical.
Landholder Duty map
MARQ has produced, as a general, high-level guide, this summary of key aspects of the Landholder Duty (and equivalent) rules across the different States and Territories which is current as at 20 November 2024.
The rules are complex, can be nuanced, and do change. There is therefore never any substitute for obtaining advice from a stamp duty expert who knows funds and capital raising. Our Landholder Duty map is for general information only and shouldn’t be taken as advice. However, it can serve as a useful guide to how the tests and thresholds vary across the jurisdictions.
MARQ has experience helping clients structure property funds with assets across the country and works closely with trusted stamp duty advisers to ensure the most efficient result is achieved in each case.
