Director changes can trigger landholder duty in Victoria. What does this mean for you?

If you own or advise on property held through companies or unit trusts, a recent Victorian Supreme Court decision highlights a significant duty exposure. [1] The Victorian Supreme Court has confirmed that simply changing the director or shareholder of a corporate trustee for a landholding unit trust can trigger landholder duty under section 82 of the Duties Act[2] – even when the trust’s unitholdings remain unchanged.

This is the first time section 82 has been interpreted at this level. The Court backed the SRO’s use of section 82 to impose landholder duty, making clear that it stands alone as a separate way of charging duty, not just an anti-avoidance measure.

For business clients and accountants, this means that seemingly routine administrative updates, such as director or shareholder changes in trustee companies, could attract landholder duty in Victoria.

In short, if you manage trusts or advise clients in this space, it’s crucial to assess the landholder duty risk whenever making changes to corporate trustee structures – no matter how minor those changes may seem. 

What happened?

A unit trust owned valuable land in Victoria (worth more than $1 million). The land was held through a trust, and a company acted as trustee.

The trustee company was not being managed properly. To address this, one of the people who already had an indirect interest in the trust (as majority shareholder of one of the unitholders of the trust), Mr Tao, stepped in to take control of the trustee company. He did this by:

• acquiring all the shares in the trustee company; and
• becoming its sole director.

Importantly:

• Mr Tao did not acquire any additional units in the trust; and
• the land itself did not change ownership.

Why stamp duty became an issue

Even though nothing changed about who ultimately benefited from the land, the SRO took the view that by taking control of the trustee company, Mr Tao had effectively taken control of the landholding trust.

Under Victorian duties legislation,[3] taking control of a landholding company or unit trust can be treated as if you acquired a 100% interest in the landholding company or unit trust.  Based on this, the SRO charged landholder duty as if Mr Tao had acquired a 100% interest in the trust. 

Victorian landholding under section 82 of the Act

In a provision unique to Victoria, section 82 of the Act deems a relevant acquisition to be made where a person acquires control over a private landholder.

The elements for this section are:

• within any 3 year period, a person effectively takes control of a company or trust that owns Victorian land, the law treats that as if they have acquired an interest in the landholder for duty purposes – even if they have not actually acquired any shares or units; and
• that a deemed acquisition is usually treated as a 100% acquisition, unless the Commissioner decides that a lower percentage better reflects the circumstances.

Please note, private landholders are captured under s 82 of the Act: these are unlisted companies or private unit trust schemes that directly or indirectly hold land in Victoria with an unencumbered value of $1 million or more.

What the Tribunal and Court decided

The case went to VCAT and then to the Supreme Court. It was agreed that:

• taking control of the trustee company was enough to count as taking control of the landholding trust; and
• it did not matter that:
• the trustee company did not own the land for its own benefit;
• no trust units were bought or sold; or
• there was no real change in who ultimately benefited from the land.

In short, control mattered more than ownership.

However, because Mr Tao already had an indirect interest in the trust before taking control, the court reduced the amount treated as “acquired” from 100% to 85%.

In Victoria, you can trigger significant landholder duty just by taking control of a company or unit trust that owns land, even if:

• the company or trust does not buy any additional land;
• you do not acquire any additional share in the company or units in the trust; and
• nothing changes economically in substance.

This includes administrative or management changes – such as changing directors or shareholders of a trustee company – can have unexpected and expensive duty consequences.

What factors were relevant?

The Supreme Court clarified the following 4 key points from the earlier VCAT decision:

1. Landholder duty applies to a change of director and change of control.

The decision affirms that landholder duty will apply even if no land is transferred, no units are sold, and there are no changes in beneficial ownership.

2. Section 82 is a ‘discrete head of duty’.

The Court confirmed that section 82 is not tied to traditional acquisition concepts. It stands alone as a mechanism to impose duty.

3. ‘Control’ is assessed as a matter of practical influence.

Appointment as the sole director of a corporate trustee will ordinarily be sufficient to prove ‘control’ exists.

4. Although a 100% acquisition is deemed, the Commissioner retains a discretion to determine a lesser percentage.

In this case, VCAT reduced it to 85% to reflect a pre-existing economic interest.

What does this mean for you?

As a result of this decision, liability for landholder duty may extend to all directors of trustee companies. The provisions of the Act must be considered any time there is a change of director of a trustee company of a private landholding unit trust.

Any time there is a change of a single director or multiple directors at once, the SRO may be alert to liability for landholder duty.

Are there any other dangers?

Ordinarily, a single change of trustee of the landholder unit trust should not be subject to landholder duty as the change of trustee exemption applies (at least on the transfer of land to the incoming trustee).  However, it is possible that the SRO may argue that this too is a change of control over the landholding unit trust in the future.

Best practice for Victorian landholders going forward

In line with the Supreme Court’s finding, companies and trustees should be careful with the appointment of new directors.  There are a number of factors to consider before a restructure, including:

• succession planning;
• divorce or relationship breakdown;
• shareholder exits;
• bringing adult children into control;
• estate planning; and
• SMSF corporate trustee restructures.

The SRO accepted that not every change of director of a trustee company will trigger landholder duty, especially where control is shared among several people. However, the risk is much higher where one person becomes both the sole shareholder and sole director, as happened in this case.

Because of this, trusts that own land should review past changes to directors or shareholders of their trustee companies to check whether landholder duty should have been paid and, if so, whether it needs to be disclosed to the SRO. Legal advice in this space is now more important than ever.

What are the Cleardocs products available?

• Company Registration | Set up a new company
• Change of Trustee Unit Trust
• Change to Sole Director Company

More information from Maddocks

For more information, contact Maddocks on (03) 9288 0555 and ask to speak to a member of the Commercial team.

More Cleardocs information on related topics

• Be careful when varying a trust deed for a trust that holds property! A change in ‘beneficial ownership’ may result in transfer duty
• Overview of some things to consider when registering an Australian company
• SMSF Trustees: Why should I use a corporate trustee?

[1] Ibid.

[2] Tao v Commissioner of State Revenue (Vic) [2025] VSC 831.

[3] Section 82 of the Duties Act 2000 (Vic) (Act).