The recent Court of Appeal decision in Oliver Hume Property Funds (Broad Gully Rd) Diamond Creek Pty Ltd v Commissioner of State Revenue [2024] VSCA 175 (Oliver Hume) has highlighted potential implications for investors that invest in companies and/or unit trusts that invest in property.
This article examines the Court of Appeal decision and implications of the Oliver Hume case.
For a summary of the background facts of Oliver Hume and the outcome of the original Victorian Administrative and Civil Tribunal (VCAT) decision, see our prior article here: ‘Watch out for extra transfer duty on property investments via a company or unit trust’. In particular, a special purpose company (Diamond Creek Pty Ltd) was used to purchase land in outer Melbourne with the objective of developing the site for investment return.
What is Landholder Duty?
The Duties Act 2000 (Vic) (Duties Act) imposes duty on transfers of shares or units in entities that hold land in Victoria where the site/unimproved value of that land is $1 million or more. Landholder duty applies where a person (including a company) acquires at least:
- 20% of the units in a private unit trust;
- 50% of the shares a private company; or
- 90% of shares in a public unit trust.
Crucially, landholder duty applies where multiple acquisitions are aggregated together to achieve the relevant percentage as above. More specifically, multiple acquisitions are aggregated together when they are acquired by any of the following:
- the same person/company;
- an associated person (eg, a relative, a partner in a partnership, etc); or
- any other person in an associated transaction (eg, that gives effect to substantially one arrangement).
The Oliver Hume decision hinges on multiple investors acquiring shares in a company for the specific purpose of developing and selling the developed properties that constituted an ‘associated transaction’.
Court of Appeal decision
The facts of Oliver Hume involved the issue of 1.8 million shares in Diamond Creek Pty Ltd to 18 investors including a number of SMSF investors (14 were existing Oliver Hume clients, 2 were referred by a consultant and 2 were unrelated to the others). No duty was paid in respect of these shares that raised $1.8 million. The Commissioner aggregated these acquisitions on the basis that they constituted ‘substantially one arrangement’. This resulted in duty, penalties and interest being imposed on the issue of shares in Diamond Creek Pty Ltd. This amount was in addition to the duty that Diamond Creek Pty Ltd paid on the original acquisition of the land in Diamond Creek.
Oliver Hume challenged the Commissioner’s determination, contending that each share issue was a discrete transaction and not sufficiently connected to be aggregated. However, VCAT and subsequently the Court of Appeal, upheld the Commissioner’s position, finding that:
- the acquisitions were interconnected in circumstances where no individual acquisition could go ahead at all unless the total of $1.8 million was raised;
- the effect of the acquisitions of the shares by the 18 investors, substantively altered the shareholding in the landholder;
- the definition of an ‘associated transaction’ depends on the relationship between the acquisitions and whether they are ‘substantially one arrangement’ (ie, not on the relationship of the individuals concerned); and
- the share acquisitions, although implemented across multiple transactions, were part of substantially one arrangement.
This decision reinforces the principle that allows the Commissioner to look beyond the formal structure of transactions and aggregate acquisitions where there is evidence of a coordinated or concerted acquisition strategy.
Obligations on landholder acquisitions
The State Revenue Office (SRO) must be notified of any duty liability including any relevant acquisition in a landholder within 30 days. The SRO offered an amnesty period and encouraged voluntary disclosures for arrangements covered by the ‘associated transaction’ head of duty with similar facts involved as in the Oliver Hume decision without any penalty for disclosures made prior to 30 June 2025.
SRO ruling on ‘associated transaction’
Note that the SRO has issued a ruling on the meaning of ‘associated transaction’, namely DA- 057v2 (SRO Ruling). This ruling lists factors that the SRO will take into account to determine whether persons are ‘acting in concert’ in relation to acquisitions which ‘form, evidence, give effect to or arise from substantially one arrangement, one transaction or one series of transactions’. In determining whether acquisitions constitute an ‘associated transaction’, the Commissioner will consider, among other things, the following:
- The existence of any agreement, understanding or arrangement (written or oral) between the vendor(s) and/or the purchasers (acquirers) of the interests in the landholder.
- Whether there is any interdependency between the acquisitions, including whether completion of any of the acquisitions is conditional on the completion of any other acquisition.
- Whether the acquisitions of the interests were negotiated independently or together and/or arise from common circumstances.
- Whether the persons from whom the interest(s) were acquired are the same or associated persons.
- The relationship (if any) of the persons who acquired interests in the landholder.
- The period of time over which the interests were acquired.
Where clients believe they may have inadvertently triggered landholder duty, they should still consider a voluntary disclosure as it may still mitigate any penalty and interest exposure. While the penalty amnesty that was on offer up to 30 June 2025 following the Oliver Hume decision has now formally concluded, there can still be some concessions for making a voluntary disclosure from a penalty and interest perspective.
Advisers, including accountants, tax agents and lawyers who have clients, including SMSFs, that have been or are involved in similar unit trust and company arrangements as in the Oliver Hume decision or that involve one or more of the factors referred to in the SRO Ruling reflected above, should consider:
- reviewing recent and future capital raisings for potential landholder duty exposure;
- reviewing associations between investors to determine whether there are any associated persons or entities;
- assessing all the acquisitions of units/shares as to whether they may form part of substantially one arrangement and may constitute an associated transaction; and
- ensuring appropriate documentation and legal advice is sought to determine whether there is any exposure and whether a voluntary disclosure is appropriate.
Prior industry practice
The Oliver Hume decision came as a surprise to many advisers as similar capital raisings have been popular in the property development industry for many years. This industry practice may have relied on the Commissioner not regarding acquisitions of interests by independent members of the public as an associated transaction if the acquisitions were made in response to a genuine public offer under a product disclosure statement or prospectus lodged with the Australian Securities and Investments Commission. As noted, this view appears to have been relied on more broadly, especially by many with private arrangements like the one in Oliver Hume.
The SRO Ruling has been updated following the Oliver Hume decision and it confirms that private arrangements do not obtain this concession.
Is there a similar risk in other Australian states and territories?
It is worth noting that similar provisions apply in the duty legislation of numerous other Australian jurisdictions. Thus, advice should be obtained from a lawyer with relevant expertise in the jurisdiction where similar ‘associated transactions’ have occurred.
Conclusion
In view of the above, trustees, investors, and associated entities involved in capital raisings involving share and/or unit acquisitions that involve real estate in Victoria should check whether they have any exposure to Victorian duty under the landholder or other duty provisions (eg, economic entitlement duty). If they consider they do, they should seek expert advice to determine whether they should make a voluntary disclosure.
As noted above, there were a number of SMSF investors in the Oliver Hume case and SMSF trustees are a popular source of funding for property developers. Thus, SMSF advisers should be aware of the impact of this recent development.
Naturally, DBA Lawyers would be pleased to assist.
Related articles:
- Watch out for extra transfer duty on property investments via a company or unit trust.
- Advantages of ordering unit trusts from DBA Lawyers
- SMSFs investing via unit trusts
- Do you know about all these Victorian taxes?
- Should you have a unitholders deed?
- Why you should order discretionary trusts from DBA Lawyers
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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 Daniel Butler, Director ([email protected]) and Nick Walker, Lawyer ([email protected]).
DBA LAWYERS
14 August 2025
