In Lincara Pty Ltd v Commissioner of State Revenue [2018] VCAT 1060, the Taxpayer sought review of a decision of the Commissioner to impose duty of $412,500 on the transfer of three rural properties (Properties) from a unit trust (Unit Trust) to the Taxpayer in its capacity as trustee of a superannuation fund (Super Fund).

The Taxpayer claimed that the transfer was exempt from duty under section 36B of the Duties Act 2000 (Vic) (Duties Act), which applies to property passing from a unit trust to a unitholder. The Taxpayer argued that the transfer was exempt from duty on the basis that, at the time of the transfer of the Properties, the Taxpayer as trustee of the Super Fund owned all of the units in the Unit Trust.

This case considered the meaning of the words ‘the relevant time’ within the context of section 36B of the Duties Act. The Taxpayer contended that ‘the relevant time’ is when the unitholder acquired their units in the Unit Trust. The Tribunal ultimately confirmed the Commissioner’s view that, on the proper construction, ‘the relevant time’ is when the trustee of the Unit Trust acquired the Properties.

The Properties were acquired by the trustee of the Unit Trust between 1985 and 1996 and the Super Fund was established in 1995. All of the units in the Unit Trust were transferred to the Taxpayer as trustee of the Super Fund in two lots (first, a 25% interest in the Unit Trust was acquired on 29 June 2007 and the remaining units were acquired on 21 September 2007). In 2016, the trustee of the Unit Trust transferred the Properties to the Taxpayer.

The Taxpayer argued that the transfer was exempt from duty under section 36B of the Duties Act, as follows:

  • the Properties were subject to a unit trust scheme in respect of which duty had already been paid (on the acquisition of the units in the Unit Trust by the Taxpayer)
  • the transferee was a unitholder of the Unit Trust at ‘the relevant time’ (the Taxpayer maintained that the ‘relevant time’ was when the remaining units in the trust were transferred to the Taxpayer) and
  • the Taxpayer accepted the transfer in its capacity as trustee of the Super Fund and all of the beneficiaries of the Super Fund at the time of the transfer were beneficiaries of the Super Fund at the ‘relevant time’.

As mentioned above, the primary point of contention was around what constituted ‘the relevant time’. This is defined in section 36B of the Duties Act to mean “the time at which the property first became subject to the principal scheme”. Accordingly, the Taxpayer relied on the broad definition of a unit trust scheme – being “any arrangements for investors to participate in the revenue generated from acquiring, holding and disposing of any property that is subject to the trust” – in arguing that its acquisition of the units in the Unit Trust constituted such an ‘arrangement’, and therefore, the ‘relevant time’ was the time of this transaction.

The Commissioner’s position was that the Taxpayer would only be entitled to the exemption under section 36B of the Duties Act if it had been a unitholder in the Unit Trust at the time each of the Properties came to be held within the trust. However, as the Taxpayer did not become a unitholder until 2007 (after the time each of the Properties had been acquired by the Trustee) the exemption cannot apply.

Further, the Commissioner submitted that the requirements of section 36B of the Duties Act could not be satisfied because two of the Properties were acquired by the Unit Trust before the Super Fund was even established, and in respect of the third Property, there was no evidence of the identities of the beneficiaries of the Super Fund in 1996.

Ultimately, the Tribunal held that that ‘the relevant time’ should be interpreted in accordance with its plain and ordinary meaning and that, as the Taxpayer did not hold units in the Unit Trust when the Properties were acquired, the decision of the Commissioner must be confirmed.