The decision of BPG Caulfield Village v Commissioner of State Revenue (2016) VSC 172 did not sit well with the Commissioner of State Revenue and on 18 June 2019 amendments to the anti avoidance provisions dealing with ‘economic entitlements’ by way of the State Taxation Acts Amendment Act 2019 (Vic) amending the Duties Act 2000 (Vic) (Act) received Royal Assent and is now in force.

Previously if you or a private unit trust or a private company shared in the profits, income, capital gains of a property or proceeds of sale of a property (where the value of land is $1 million or more) that was over the threshold of 50%, stamp duty would be payable. Today, any private individual or discretionary trust or any self managed super fund that makes reference to a share of profits and in any way acts as if they were the freehold owner of the land would be liable for stamp duty on the date the interest is acquired. If no reference is made to any percentage or formula then stamp duty will be calculated based on 100% of the value of the property.

What were the previous Economic Entitlement Provisions?

Previously, a person did not need to pay stamp duty if no beneficial ownership in the land is passed on to the person. However, the Act contains complex ‘economic entitlement’ rules within its landholder duty provisions, which can apply to development agreements entered into between a private landholder (company or unit trust) and a developer although no beneficial ownership in the land has effectively passed on to the developer.

Under a typical development agreement, the developer will be entitled to charge the landowner for the development costs incurred and might be entitled to a margin on those costs and/or a share of the profit derived from the development.

Prior to the State Taxation Acts Amendment Act 2019, stamp duty was only payable for these economic entitlements if the land held was by private unit trusts and private companies where the economic entitlement acquired was 50% or more.

What are the new Economic Entitlement Provisions?

By virtue of the State Taxation Acts Amendment Act 2019, major changes have been introduced in the ‘economic entitlement’ provisions. These widen the scope of economic entitlements – the provisions apply to all types of landowners including individuals, companies or trustees with land worth more than $1 million in Victoria.

A person acquires an economic entitlement if the person is entitled to any one or more of these:

  • Participation in income, rents and profits derived from the subject property.
  • Participation in the capital growth of the subject property.
  • Proceeds of sale from the subject property.
  • Any amounts relating to the above matters.
  • Acquisition of any dutiable property.

Where a person obtains an economic entitlement, the person is taken to have acquired an ownership interest in the land that is chargeable with duty. So where a developer enters into a development agreement with an owner of land under which the developer is entitled to an economic entitlement in relation to the land, the developer will be taken to have acquired an ownership interest in the land upon entering into the agreement. Basically if you act like a land owner and are able to receive any amounts a landowner is entitled to receive you will be liable to pay stamp duty on the date you obtain that right.

The duty payable is determined by reference to the unencumbered value of the land at the time the agreement was entered into (i.e. normally vacant land value) not by reference to the end value of the development. You would be well advised to consider entering into any agreement to develop at a time when the property is valued at its lowest or else reference payment by a fixed amount of margin without reference to a value on the increase after development.

How is stamp duty of an Economic Entitlement determined?

Where a development agreement provides a developer with an economic entitlement by reference to a stated percentage and nothing else (eg the agreement provides that the developer will obtain a stated percentage of the profits of the project), the interest in the land acquired for the purposes of the provisions is to be determined with reference to that stated percentage. This is irrespective of whether or not the developer ultimately receives a profit due to cost blow-outs.

Duty is charged on the value of the land at the time the economic entitlement is acquired. This is then multiplied by the percentage of the economic entitlements acquired.

In cases where a percentage cannot be determined, the developer is taken to have acquired 100% of the land and will be liable pay duty on its full value. However, the developer can apply to the Commissioner of State Revenue to determine a lower percentage in such a case.


There are transitional provisions and we caution that the legislation is couched in very wide terms. We recommend you seek advice on any development arrangement negotiations in relation to any Victorian land worth $1 million or more. Cancelling an existing agreement may have the same effect.