Getting the timing wrong can turn one dutiable transaction into two
A recent decision by the NSW Civil and Administrative Tribunal is a reminder that timing matters for duty. The order and date of steps in a transaction can change the duty outcome, and misunderstanding the timing rules can easily produce an unexpected landholder duty liability or, in some cases, double duty.
In Ivo Holdings Pty Ltd v Chief Commissioner for State Revenue [2026] NSWCATAD 206 the NCAT held that a transfer of units in a unit trust that occurred on the same day but prior to the unit trust entering into a contract to acquire land was subject to duty under the landholder duty regime, due to the particular timing rules in the Duties Act 1997 (NSW).
What happened?
The Ivo Hong Unit Trust was established on 4 November 2020 with Richesse Management Group Pty Ltd holding all 1,000 units.
On the same day, Mr and Mrs Hong, the controllers of Richese Management Group, received advice that a discretionary trust would be a better holding entity for the units. Richesse Management Group agreed to transfer all units to Ivo Holdings Pty Ltd as trustee of the Ivo Hong Discretionary Trust. The transfer documents were signed that morning.
Later that afternoon, the trustee of the Ivo Hong Unit Trust entered into a contract to buy an Eastwood property for $2.1 million. The unit transfer was registered and the property purchase settled on 16 December 2020.
In 2024, Mr Hong applied to Revenue NSW for a private ruling on a proposed transfer of the property. This prompted Revenue NSW to review the 2020 transactions. The Chief Commissioner assessed Ivo Holdings, as trustee of the Ivo Hong Discretionary Trust, for landholder duty and interest on the November transaction.
Why did landholder duty arise?
In NSW, landholder duty applies when a person makes a relevant acquisition in a private company or unit trust that holds NSW land with a market value of $2 million or more.
Section 160 of the Duties Act treats a purchaser under an uncompleted land contract as entitled to the land. The unit trust therefore became landholder when it entered into the property contract on 4 November 2020.
Section 161 treats the purchaser of shares or units in a landholder as having the relevant interest from the "agreement liability date", which is the date that is the first to occur of certain events. In this case, it was accepted that the agreement liability date was the morning of 4 November 2020, being before the contract to purchase the land was entered into and before the unit trust was a landholder.
However, the NCAT decided that "date” meant the whole calendar day, not the exact time a document was signed. As such, it does not require the events of a day to be separated by time. It was enough that both agreements were made on 4 November 2020. The effect was that the Ivo Hong Unit Trust was a landholder on the agreement liability date and the transfer of units was subject to duty in addition to the duty that was paid by the trustee in acquiring the land.
Key takeaways
Landholder duty has unusual timing rules, and section 161 is one example. This matters because the structure and sequencing of a transaction can produce additional duty. In some cases, landholder duty may apply on top of duty already paid on the acquisition of the underlying land.
Before implementing a transaction, advisers should identify each potential duty point and test how the landholder duty timing rules apply to the proposed structure.
Additionally, a ruling request or later dutiable transaction may prompt Revenue NSW to review earlier dealings involving the same entities or structure, including earlier transfers of shares or units, changes in ownership and property acquisitions. That review may uncover an unpaid historical duty liability. Before approaching Revenue NSW, advisers should review the full transaction history of their client's structure and consider whether a voluntary disclosure should be made.
How we can help
Careful planning can help avoid unexpected duty outcomes. Contact our team if you would like advice on the duty consequences of a proposed transaction or restructuring.
Note: Ivo Holdings has appealed this decision to the NCAT Appeal Panel.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
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