Fundamentals of Landholder Duty for Companies and Unit Trusts

Understanding Landholder Duty and when it applies is important to companies and unit trusts that classify as a Landholder. 

1. Landholder Duty is essentially stamp duty that applies to indirect property transfers, such as share transfers in a company or transfers of units in a unit trust that own real estate.
2. Who is a landholder? A landholder can be any of the following who holds land (landholdings) in NSW with an unencumbered land value of $2 million or more:
   • Private unit trust scheme or private company (Private landholder) or
   • Public unit trust scheme or listed company (public landholder)
3. What if the unencumbered value of property is less than $2 million? The threshold for landholder duty is $2 million or more. If the unencumbered value of landholdings owned by a private or public landholder is less than $2 million, landholder duty is not applicable.
4. When does landholder duty apply?  Landholder duty applies when there is an acquisition of a significant interest, through the acquisition of shares or units, in a company or unit trust that has landholdings valued at over $2 million.
5. What is classified as a “significant interest”?  A significant interest means that if all the property is distributed, you are entitled to:
   • For acquisitions made on or after 1 February 2024
     • 50 per cent or more of the property in a ‘private landholder’, or
     • 20 per cent or more of the property in private unit trust schemes, or
     • 90 per cent or more of the property in a ‘public landholder’
   • For acquisitions made prior to 1 February 2024
     • 50 per cent or more of the property in a ‘private landholder, or
     • 90 per cent or more of the property in a ‘public landholder’
   • Acquiring a significant interest does not have to occur in one event. For instance, if you already hold  45 per cent of the shares in a landholder that is a private company and then acquire another five per cent, you may be liable to pay landholder duty.
6. How is landholder duty calculated?  It is calculated at the same rate as transfer duty. It is calculated on the unencumbered value of the landholdings and goods of the landholder at the time a relevant acquisition is made, as well as the number of acquisitions made in a ‘statement period’ (being the period commencing three years before the date of the relevant acquisition and ending on the date of the relevant acquisition).
7. Could I be exempt from landholder duty?  Some examples of possible exemptions, concessions and reduction in duty include:
   • Changes in trustees;
   • When an interest acquired is due to a deceased person’s will;
   • Landholdings consisting of primary production land;
   • Where an interest is acquired as a result of the break-up of marriage and other relationships.
8. When does it have to be paid? Like stamp duty, landholder duty must be paid within three months from the date of making a relevant acquisition. Interest will be applied to any late payments.

Article by Miranda Smith, Solicitor with Commins Hendriks.  Please contact Commins Hendriks to make an appointment for advice specific to your situation. 

The advice provided above is general in nature and is not formal legal advice.