Almost all Victorian development agreements could soon create a stamp duty liability.
Any sharing of profit by a landowner with a property developer who does not own the land in proportion to the profit entitlement could be assessable to stamp duty.
In what may be described as a blind siding amendment to the current stamp duty law applying to what are quite standard property development agreements in Victoria, the Victorian Government has introduced a major amendment to the Victorian Duties Act 2000 in the State Taxation Amendment Bill 2019.
This amendment was not announced by the Treasurer nor highlighted in the recent Victorian budget and yet it is arguably the most significant amendment to the Duties Act.
The law currently allows for a property developer to be entitled to up to 50% of the profit above costs of a property development without having to pay stamp duty where the property development structure does not involve the transfer of the property to the developer but to remain with the original joint venture land owner.
This is the standard property development arrangement in Victoria – the original land owner is quite normally entitled to 50% or more of the profit and the remaining share would be with the experienced property developer.
The Bill introduced into Parliament will assess any party receiving an entitlement to profit who is not a landowner or receives more profit than their ownership proportion of the land.
If you wish to discuss the ramifications of this amendment or have any other State Revenue query, please contact Tony Pointon or one of our experienced State Revenue team.