Tax

Practitioners advising on or transferring shares in a private company or units in a unit trust should be alert to potential duty consequences.

Nominating a new purchaser under a contract of sale of land is fraught with risk. LPLC continues to see claims where purchaser clients enter into a contract (or option) to purchase land and then nominate a substitute or new purchaser after applying for a planning permit, building permit or undertaking other land development activities.

LPLC continues to see claims involving land transfer duty (stamp duty) and other state property taxes.

Changes to stamp duty and the introduction of an annual property tax on commercial and industrial land under the Commercial and Industrial Property Tax Reform Act commenced 1 July 2024. Practitioners acting in matters involving commercial or industrial land in Victoria need to be aware of the full extent of these significant reforms.

LPLC has provided comprehensive information about the reforms in the article Commercial and Industrial Property Tax reform in Victoria — What you need to know, and a webinar Commercial and Industrial Property Tax (CIPT): Navigating the new reform.

Here we provide some additional answers to specific questions we have received from practitioners. We recommend practitioners use this information to gain a full understanding of the reforms and their practical application.

The Commercial and Industrial Property Tax Reform Bill (the Bill) was introduced into the Victorian Parliament on 20 March 2024. The reforms are expected to pass into law in early May before commencing on 1 July 2024 (Note: the Act was passed in the same terms as the Bill).

'Foreign purchaser additional duty' (FPAD) provisions have now been in place in the Duties Act 2000 (Vic) (Vic Duties Act) since 2015.

From 1 March 2020, the Victorian State Revenue Office (SRO) changed its approach to FPAD in the context of acquisitions of residential property made by 'family' discretionary trusts. The change of approach has meant there has been, and will be, an increase in discretionary trusts found by the SRO to be foreign trusts liable to pay FPAD when acquiring residential property.

Practitioners practicing in conveyancing matters need to be aware of the way the FPAD regime works for discretionary trusts so that clients can be advised of its application.

LPLC is continuing to see conveyancing claims where practitioners have assisted clients transferring property to a spouse or domestic partner, with an exemption from paying land transfer duty under section 43 of the Duties Act 2000 (Vic) and have failed to provide adequate advice about the criteria for the exemption.

In 2023 the Legal Practitioners’ Liability Committee published an article highlighting important changes in Victorian Property Tax.

Since then we have received many enquiries about the Vacant Residential Land Tax (VRLT) which was also discussed in that article. To assist practitioners we have below provided short answers to some of the more common questions we have received.

The new Windfall Gains Tax (WGT) introduced by the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021 commences on 1 July 2023.

In broad terms, WGT applies to land rezoned after 1 July 2023.

Practitioners need to be across the issues now, particularly if negotiating long term sale contracts, or options, that will settle after that date that may then be subject to the WGT.

We've put together information and resources to help lawyers understand the legislation, manage the associated risks and provide guidance about how to act now to avoid surprises later.

The exemption for transfers between spouses or de facto partners changed on 1 July 2017 but some practitioners have not kept up with these changes. There are now many more requirements to meet before an exemption can be obtained and practitioners need to advise their clients about them. It is important to always check requirements and not rely on your memory when it comes to duty.

Practitioners should always be mindful of the potential tax consequences of a transaction. Each year the LPLC sees claims where the practitioner has overlooked the tax implications of a matter or considered that it’s not their role to advise on tax issues or recommend that the client obtain tax advice from a tax lawyer or accountant.

This is a frequently asked GST question with a few twists.

Look before you leap is an old age adage that is well suited to the situation where a client informs their practitioner that they want to nominate. LPLC has seen a number of claims where a practitioner has failed to fully advise a client about the consequences of nominating.

This blog contains a case study of a land tax claim.