A change of director can trigger landholder duty says Victorian Supreme Court

If you own or advise on property held in companies or unit trusts, then Tao v Commissioner of State Revenue [2025] VSC 831, has a significant message for you. The decision affirms that changing the director or shareholder of the corporate trustee of a landholding trust can trigger Victorian landholder duty, even if the land itself never changes hands or there are no changes in beneficial interests.

In Tao v Commissioner of State Revenue [2025] VSC 831, the Victorian Supreme Court upheld the State Revenue Office of Victoria’s (SRO) decision to controversially utilise section 82 of the Duties Act 2000 (Vic) (Duties Act) to impose landholder duty.  

This is the first Victorian Supreme Court decision interpreting s 82, and it confirms landholder duty as a discrete head of duty, not merely an anti‑avoidance provision.

If the Supreme Court’s decision is upheld, there will be significant ramifications in the industry, particularly because mere administrative matters involving change of directors or shareholders of trustee companies (which are private landholders) will at first instance be subject to landholder duty.

The dearth of information on the SRO’s website as to what the Commissioner considers an “acquisition of control” leaves taxpayers and advisors with a lack of information as to whether certain administrative changes would trigger a landholder duty liability and if so, whether the non-lodgement of a landholder duty liability would be subject to penalty tax and interest.

Tao v SRO: Can a director takeover of a trustee company trigger landholder duty?

A unit trust owned land worth more than $1 million in Victoria, with 66WR Pty Ltd (Trustee Company) acting as trustee of that trust.

The Trustee Company’s director allegedly mismanaged finances, so it was decided that one of the unitholders, Mr Tao, was to take over as director of the Trustee Company. The decision to take over the company was agreed to by one of the other unitholders and was discussed with the bank involved with various financing matters.

Mr Tao took control of the Trustee Company by acquiring all its shares and becoming sole director. Of note is the fact that Mr Tao did not acquire more units in the trust.

Controversially, the SRO said this activity amounted to acquiring control of the landholder and decided to impose landholder duty through an unused provision, being section 82  of the Duties Act.

The SRO then subsequently charged landholder duty on an assumed 100% acquisition.

Mr Tao referred the matter to VCAT and, while it was found that a relevant acquisition was deemed to have occurred under section 82, VCAT reduced the percentage deemed to be acquired to 85% having regard to pre-existing economic interests held by Mr Tao.

The Supreme Court’s findings on landholder duty

Following the VCAT decision, Mr TAO then appealed the matter to the Supreme Court, where the appeal was ultimately refused, with the Supreme Court clarifying four key points.

1. Landholder duty applies to change of director and change of control.

The decision affirms that landholder duty will apply even if no land is transferred, no units are sold, and there are no changes in beneficial ownership.

2. Section 82 is a “discrete head of duty”.

The Court confirmed that s 82 is not tied to traditional acquisition concepts. It stands alone as a mechanism to impose duty.

3. “Control” means practical influence.

Being the sole director of a trustee company is enough.

4. The Commissioner’s discretion can reduce the deemed 100% acquisition.

In this case, VCAT reduced it to 85% to reflect a pre‑existing economic interest.

Key takeaways for owners and advisors of property held in company or unit trusts

1. Changing directors and/or shareholders of a trustee company can trigger landholder duty.

This is true even if you simply replace a director, you take on a board role and no equity changes hands.

2. Think carefully before restructuring your trust or corporate trustee.

If you are considering a restructure, there are a number of risk factors to consider prior to a decision being made, each with their own legal implication and for some, tax liability. Common risk scenarios include:

• succession planning
• divorce or relationship breakdown
• shareholder exits
• bringing adult children into control
• estate planning
• SMSF corporate trustee restructures.

3. Assess landholder duty before making control changes.

With the Supreme Court confirming the discrete head of duty, careful consideration must be given to landholder duty implications for any changes in trustee companies on the basis that section 82 is no longer utilised merely for anti-avoidance purposes.

4. Review past restructures for exposure.

The Commissioner in oral submissions before the Supreme Court noted that not every change in director for a corporate trustee (particularly where management and control is diversified) will trigger duty under the change in control provisions. From this omission, we can safely deduce that the decision to pursue the discrete head of landholder duty may only arise where, as in this case, there was a change to sole shareholder and sole director.

Notwithstanding, to fully appreciate exposure to historical landholder duty liabilities, it is recommended to review past director and share changes in trustee companies that are landholders and consider whether a duty liability should be lodged with the SRO.

Contact our taxation team for further advice

There’s a great deal of background knowledge required to navigate this newly pursued discrete head of landholder duty.  Macpherson Kelley’s tax lawyers can assist in understanding how landholder duty laws apply, offering valued advice before it is too little too late.

Contact us today to discuss how to manage your landholder duty obligations effectively.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.