Under the Duties Act 2000 (Vic) (Duties Act), when someone (including a company) obtains real property in Victoria, land transfer duty is ordinarily payable based on the dutiable value of the land.
It is a common law right in Victoria for a purchaser described on a contract of sale to later nominate another entity to obtain the right to take the property.
If a nomination is made to a subsequent purchaser, care is needed to ensure there isn’t any additional duty liability due to the sub-sale provisions in the Duties Act applying.
This article is specific to the duty regime in Victoria. Other jurisdictions have their own duty laws and should be considered separately.
What is a sub‐sale?
Broadly, a sub-sale occurs when:
- a vendor enters a contract (or grants an option) to sell property to a purchaser (ie, the first purchaser);
- a subsequent purchaser obtains a transfer right to the property under that contract (eg, by nomination, assignment or novation);
- the vendor transfers the property (or part of it) to that subsequent purchaser; and
- either:
- the subsequent purchaser (or an associate) gives or agrees to give additional consideration to obtain the transfer right; or
- land development occurred between contract date (or option date) and ‘nomination’ date.
If the first purchaser does nominate a subsequent purchaser but there is no additional consideration paid by the subsequent purchaser (or associate) beyond what the first purchaser agreed under the contract of sale, the sub-sale provisions do not apply. If there has been no land development in the relevant period, then the sub‐sale provisions do not apply. If the sub-sale provisions do not apply, duty will only be levied once, ie, on the ultimate transfer.
However, if the sub‐sale provisions do apply (ie, either additional consideration is paid or land development occurs in the relevant timeframe), the outcome will be that duty is levied on the actual transfer but also the nomination as if it were its own transfer.
Land Development
The meaning of land development is very broad and will capture many things that may not be expected such as:
- Preparing a plan of subdivision.
- Applying for a planning or building permit.
- Requesting a scheme amendment.
- Doing anything in relation to land for which a building permit or approval would be required.
- Doing any other activity that would enhance the value of the land.
Key timing issues
Timing is critical, particularly for the land development trigger. For example, if land development occurs before the nomination date (ie, between contract date and nomination date), the sub‐sale provisions will apply.
If land development occurs after the nomination date (ie, after the subsequent purchaser obtained the transfer right) then it generally will not trigger the sub-sale provisions
The SRO provides some useful examples (see here), summarised below:
- Ben signs a contract of sale. Shortly after, he applies for planning permit. He then nominates his discretionary trust to be a subsequent purchaser. On settlement, the property is transferred to Ben’s discretionary trust. Because land development (ie, application for the planning permit) occurred between the contract of sale signing and the nomination, the sub‐sale provisions apply.
The first purchaser (Ben) pays duty on the contract of sale value, and the trustee of the trust pays duty on the nomination value. In other words, double duty.
Alternatively, if Ben had nominated the trustee of his discretionary trust before applying for the planning permit (and no additional consideration was provided and no other land development occurred before the nomination date), duty would not have been charged on the dutiable value of the contract of sale.
- Linh signs a sale contract for $3M. Before settlement she nominates Mel in exchange for a nomination fee of $100,000. As the $100,000 is additional consideration, the sub‐sale provisions apply.
Linh will pay duty on $3M and Mel will pay duty on $3.1M.
Conclusion
The sub-sale provisions are enlivened when a subsequent purchaser is nominated under a contract of sale and there is additional consideration paid (either by a subsequent purchaser or an associate) or land development undertaken between contract/option date and nomination date.
Prior to signing any contract of sale, the property lawyers and potential purchasers should consider whether there is any possibility that the purchaser may be substituted (nominated/assigned/novated) to another entity and consider the sub-sale provisions if appropriate..
Purchasers should be very clear on their intentions with nomination before taking nay ‘land development’ steps.
Given the complexity and the risk of double duty, it is prudent that any nomination be carefully reviewed prior to occurring. Expert advice should be sought if there is any doubt.
Related articles/webinars:
- Tao v Commissioner: control, directors and landholder duty in Victoria
- Watch out for extra transfer duty on property investments via a company or unit trust
- Victorian landholder duty – recent case where investors (including SMSFs) in companies and unit trusts exposed to duty
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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. The above does not constitute financial product advice. Financial product advice can only be obtained from a licenced financial adviser under the Corporations Act 2001 (Cth).
Note: DBA Lawyers presents monthly online SMSF training. For more details or to register, visit www.dbanetwork.com.au or call 03 9092 9400.
For more information regarding how DBA Lawyers can assist in your SMSF practice, visit www.dbalawyers.com.au.
By Nick Walker ([email protected]), Lawyer and Shaun Backhaus ([email protected]), Director
DBA LAWYERS
20 November 2025
