Commissioner for Act Revenue v GLDT Pty Ltd ACN 607 932 799 as trustee of the George Lemezina Discretionary Trust; Commissioner for Act Revenue v Zina Pty Ltd ACN 008 586 016 as trustee for the Michael Lemezina.. - [2025] ACAT 7

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COMMISSIONER FOR ACT REVENUE v GLDT PTY LTD ACN 607 932 799 AS TRUSTEE OF THE GEORGE LEMEZINA DISCRETIONARY TRUST; COMMISSIONER FOR ACT REVENUE v ZINA PTY LTD ACN 008 586 016 AS TRUSTEE FOR THE MICHAEL LEMEZINA DISCRETIONARY TRUST (Appeal) [2025] ACAT 7

AA 37/2023 (AT 75/2022)
AA 38/2023 (AT 76/2022)

Catchwords: APPEAL – duty – interest in a landholder – variation of unit trust deed – issue of whether a relevant acquisition made – Duties Act 1999 Chapter 3
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 48, 79
Duties Act 1999 (R36) ss 7, 8, 58, 77, 78A, 79, 80, 83, 84, 85, 86
Duties (Consequential and Transitional Provisions) Act 1999 ss 11, 12
Legislation Act 2001 s 142

Cases cited:CIC Australia Ltd v ACT Planning and Land Authority [2013] ACTSC 96
Commissioner for ACT Revenue v Leemhuis Investments Mitchell Pty Ltd (Appeal) [2023] ACAT 83
GLDT Pty Ltd as Trustee of the George Lemezina Discretionary Trust v Commissioner for ACT Revenue; Zina Pty Ltd as Trustee of the Michael Lemezina Discretionary Trust v Commissioner for ACT Revenue [2023] ACAT 50
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28

List of

Texts/Papers cited: Explanatory Statement, Duties Bill 1998
Hansard Debates of the Legislative Assembly for the Australian Capital Territory, 10 December 1998

Tribunal:President MT Daniel
Senior Member Meagher SC

Date of Orders:  31 January 2025
Date of Reasons for Decision:      31 January 2025
Date of Publication:  7 February 2025
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          AA 37/2023

BETWEEN:

COMMISSIONER FOR ACT REVENUE
Appellant

AND:

GLDT PTY LTD (ACN 607 932 799) AS TRUSTEE OF THE GEORGE LEMEZINA DISCRETIONARY TRUST

Respondent

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 38/2023

BETWEEN:

COMMISSIONER FOR ACT REVENUE
Appellant

AND:

ZINA PTY LTD (ACN 008 586 016) AS TRUSTEE FOR THE MICHAEL LEMEZINA DISCRETIONARY TRUST

Respondent

APPEAL TRIBUNAL: President MT Daniel
Senior Member B Meagher SC

DATE:31 January 2025

ORDER

The Tribunal orders that:

The appeals are dismissed.
The cross-appeals are dismissed.
………………………………..

President MT Daniel
For and on behalf of the Appeal Tribunal

REASONS FOR DECISION

These are two related appeals, and cross-appeals, pursuant to section 79(3) of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) from a decision of the Tribunal below (the Judgment).[1] The appeals are brought by the Commissioner for ACT Revenue (Commissioner), the cross-appeals by each respondent. Where necessary, we refer to the original Tribunal as “the Tribunal” and this Tribunal as the “Appeal Tribunal”.
[1] GLDT Pty Ltd as Trustee of the George Lemezina Discretionary Trust v Commissioner for ACT Revenue; Zina Pty Ltd as Trustee of the Michael Lemezina Discretionary Trust v Commissioner for ACT Revenue [2023] ACAT 50
A succinct summary of the nature of the matter before the Tribunal — including the footnotes there used — was set out in paragraphs 1–4 of the Judgment as follows:
1. These proceedings concern the imposition of duty under the landholder provisions of the Duties Act 1999 (as in force on 4 March 2009)[2] on the acquisition of a “significant interest”[3] in a “landholder”.[4] A liability for duty under part 3.2 of the Act arises when a “relevant acquisition” is made.[5] The Commissioner for ACT Revenue issued assessments imposing duty, penalty tax and interest on the applicants, amounting in aggregate to $3,496,172.21, on the grounds that certain transactions entered into on 4 March 2009 were dutiable under the landholder provisions of the Act. On 22 August 2022, the Commissioner disallowed the taxpayers’ objections. On 19 September 2022, the taxpayers filed applications for review of the decisions to disallow their objections.
2.     The applicant in AT 75/2022 is GLDT Pty Ltd as trustee of the George Lemezina Discretionary Trust (GLDT). The applicant in AT 76/2022 is Zina Pty Ltd as trustee of the Michael Lemezina Discretionary Trust (MLDT). At all material times GLDT and MLDT were the beneficial owners, in equal shares, of all the units in the Lemezina Investment Unit Trust (LIUT) which had substantial landholdings in the ACT. Under the terms of the trust deed, GLDT and MLDT were each entitled to 50% of the property of LIUT on a winding-up but neither was entitled to an interest in specific property. The net aggregate value of LIUT’s landholdings in early 2009 was $18,266,000. If LIUT was wound up then, GLDT and MLDT were each beneficially entitled to a distribution of $9,160,000.
3.     By a deed of variation made on 4 March 2009 and related transaction documents, the assets of the trust were split between GLDT and MLDT with effect from that date. Each acquired a 100% beneficial interest in specific properties, designated “specific investments” for the benefit of the individual unit holder. Both before and after 4 March 2009, the terms of the trust deed precluded a distribution of property in specie. Thus, if LIUT was wound up, the deed of variation meant GLDT and MLDT would each receive 100% of the net proceeds of the specific investments allocated to them, instead of 50% of the net proceeds of all the property of LIUT. As of 4 March 2009, specific investments allocated to GLDT and MLDT represented 49.82% and 50.18% respectively of all the property of LIUT available for distribution on a notional winding up. Relevantly, the entitlement of GLDT and MLDT to a percentage of the property distributed was materially unchanged by the deed of variation.
4.     The Commissioner decided these circumstances amounted to the acquisition of a significant interest in a landholder and imposed duty, penalty tax and interest of $1,742,760.56 on GLDT Pty Ltd and $1,753,411.65 on Zina Pty Ltd. Penalty tax was imposed at 75% because the Commissioner took the view the taxpayers had contrived a “tax avoidance scheme”.[6]
[2] Duties Act 1999 (Republication 36) chapter 3, part 3.2
[3] Duties Act 1999, section 83
[4] A landholder is an entity that has a landholding in the ACT (section 79). A landholding is any interest in land, other than the interest of a mortgagee, charge or other secured creditor or a profit á prendre (s 80)
[5] Duties Act 1999, section 85
[6] ‘Tax avoidance scheme’ is defined in section 8(5) of the Tax Administration Act 1999
On review, the Tribunal did not share the Commissioner’s view and instead in each case allowed the objections in full, setting aside the imposition of duty and penalty tax. Emboldened by their success, the respondents sought an order for their costs. The Tribunal declined to make that order on the basis that it was outside the limited power provided by section 48 of the ACAT Act — considering itself bound to adopt the interpretation of that provision taken by the Supreme Court in CIC Australia Ltd v ACT Planning and Land Authority [2013] ACTSC 96.
The Commissioner lodged an appeal from each substantive decision, the respondents similarly cross-appealed each costs decision.
For the appeals, we had before us all of the documents that were before the Tribunal,[7] including the previous objections and submissions, supplemented by some additional documents of relevance to the penalty tax for which the Commissioner successfully sought leave.
[7] There was an Appeal book (AB) both in hard copy and electronic form. The written submissions start at AB, page 193.
The written submissions of the Commissioner set out carefully the salient provisions of the various documents and the description is uncontroversial, except where indicated.
In oral submissions, we were taken through the various documents in detail, but what was pointed out is as described in the written submissions.
It is undisputed that there were ten units issued in the Lemezina Investment Unit Trust (LIUT). The George Lemezina Discretionary Trust (GLDT) and the Michael Lemezina Discretionary Trust (MLDT) each held 5 (or 50%) of the units in LIUT and had done since the establishment of LIUT by Trust Deed on 1 July 1983 (Trust Deed).[8]
[8] AB, pages 630ff and 654ff
It is also undisputed that LIUT had landholdings in the ACT and therefore was at all times a landholder within the meaning of section 79 of the Duties Act 1999 (the Act) version 36 (R36) which was in force from 2 February 2009 to 4 March 2009, being the relevant iteration of the legislation in force with respect to the matters the subject of the proceedings below. Section 78A of the Act defines “entities” that may be landholders as including a Unit Trust Scheme. Here, there was such a scheme.

The original Trust Deed

The original Trust Deed was entered into on 1 July 1983.[9] At the time, the trustee owned one property and $20. The respondents each had 5 units of equal value. Clause 5A provided that no unit holder shall be entitled to any individual security or investment forming part of the trust fund.
[9] A copy is at AB, page 630ff
At the time, GLDT Pty Ltd was called Lem Pty Ltd. Significantly, it was provided in the Trust Deed that the trustee could issue additional units and reclassify them. As will be seen, this was another way, apart from issuing more units or a change in shareholding, of changing the percentage attributable to each unit holder.
Clause 12(b) provided for what happened on a determination of the trust. The trustee was to sell, call in and convert into money the Trust Fund and divide the net proceeds of sale among the registered holders in proportion to the number of units held.
As well as clause 5A, clause 13 provided that no registered holder of units shall be entitled to require the transfer of any of the property comprised in the trust fund.
There was a power to vary the deed under clause 29.
In the written submissions of the Commissioner, it was pointed out that if the deed had entitled the unitholders to specific property, that could be transferred at a nominal duty under section 58(1) of the Act.

The changes to the deed and transactions on 4 March 2009

As described by the Commissioner’s written submissions, the following documents were executed or otherwise adopted.
Firstly, a Deed of Variation of the Trust Deed dated 4 March 2009.[10] It amended clause 5A by commencing it with the words “[e]xcept for the Specific Investments and any amounts attributable to the Specific Investments...”. This term was defined as an investment forming part of the Trust Fund that has been specifically nominated as a Specific Investment in accordance with clause 5B.
[10] A copy is at AB, page 677
A new clause 5B was inserted. It provided relevantly:
The Trustee may at the request of a Registered Holder treat any asset of the Trust Fund selected by that Registered Holder as an investment specifically for the Registered Holder (a ‘Specific Investment’) so that:
(i)      Notwithstanding anything else in this Deed, for such time as the asset is a Specific Investment, the Registered Holder in respect of whom the asset has been selected shall be entitled to distributions of net income and capital in accordance with the terms of this Deed in an amount equal to the net income and net capital proceeds from the Specific Investment;
(ii)     At the time of nominating the Specific Investment the Trustee may nominate any of the liabilities of the Trust Fund as being attached to the Specific Investment;
(iii)    The net capital proceeds to which the Registered Holder is entitled under Clause 5B(i) is such of the capital proceeds resulting from the disposal or other realisation of a Specific Investment as remain after discharging the liabilities attaching to that Specific Investment and any loss or outgoing relating to or incidental to the disposal of the Specific Investment not taken into account in net income under Clause 5B(i)
(iv)    …
(v)     In determining the entitlement of the Registered Holder in respect of income or capital of such part of the Trust Fund as is not a Specific Investment of any Registered Holder in accordance with the terms of this Deed, the Registered Holder shall be treated as if it did not hold such number of units… in the Trust having a market value equal to the net value of the Specific Investment…
There were inserted new clauses 14(b)–(g), including the following:
(c) For such time as an asset of the Trust Fund is treated as a Specified Investment in accordance with Clause 5B, the Registered Holder in respect of whom the asset is deemed to be held by the Trustee shall have the power, to the exclusion of all other Registered Holders, to appoint and remove Trustees with respect to the Specific Investment so that any Trustee appointed by the Registered Holder under this Clause 14(c):
(i)will hold the Specific Investment upon the trusts of the Trust to the exclusion of all other Trustees of the Trust; and
(ii)shall not be empowered by the appointment under this Clause 14(c) to hold any other property forming part of the Trust Fund upon the trusts of the Trust.
…
(g) The right of indemnity which a Trustee has pursuant to Clause 22(b) and Section 59 of the Trustee Act 1925 (ACT):
(i)shall be limited to such property of the Trust Fund that is held by that Trustee or its duly appointed nominee;
(ii)for the avoidance of doubt, shall exclude such property of the Trust Fund that is held by any other Trustee…
There was an insertion of clauses 29(a)–(c) under the heading:
“TRUST FUND MAY BE HELD BY NOMINEE”
(a) Subject to Clause 29(c) it shall not be necessary for the title to any property forming part of the Trust Fund to be held or registered in the name of the Trustee but the same may in the discretion of the Trustee be held or registered in the name of the nominee of the Trustee or any other name.
(b) The power to appoint a nominee shall vest in the Trustee who may exercise… such power:
(i) by oral declaration of the Trustee…
…
(c) A Trustee appointed pursuant to Clause 14(a) may exercise the power to appoint a nominee under this Clause 29 to the exclusion of all other Trustees who do not hold the same property provided however that a Trustee so appointed shall only be empowered to appoint a nominee under this Clause 29 with respect to property of the Trust Fund that it holds as a Specific Investment.
There was a notice of meeting issued to make the variation,[11] and a resolution abridging time.[12] It was resolved to sign the variation[13] and it was then executed by all.
[11] AB, page 679
[12] AB, page 674
[13] AB, page 675
A request was made by each unit holder to treat a scheduled list of properties as specific investments.[14] There were 21 properties listed on each schedule although that was reduced to 20 as one of the properties had already been transferred.
[14] AB, page 682 and 686–687
A meeting approved the request.[15] Specific liabilities for each list of specified properties were assigned by the Trustee.
[15] AB, page 683
In the statement of George Lemezina, tendered at the hearing before the Original Tribunal (and admitted unchallenged), he explains that the Trust also had $400,000 as well as the properties, but otherwise there were no other assets. He provided a balance sheet showing how the liabilities were assigned, and indicated it was done so as to achieve equality as near as it could be.[16] Using the valuations of each property that were also used by the Commissioner, and taking into account the liabilities that were assigned to each list of specified property and the other funds and debts on a notional winding up, if done that day, GLDT would receive 49.82% and MLDT 50.18% of the net proceeds of sale of the Trust Fund.[17]
[16] See AB, page 613ff
[17] AB, page 625
In addition, on that day it was resolved that the trustee of the Unit Trust be replaced by Zina Investments Pty Ltd ACN 134 504 877 as trustee of the Unit Trust (LIUT). This is a different company than the respondent Zina Pty Ltd.
Finally, a meeting of Zina Investments Pty Ltd nominated Lemezina Unit Trust Pty Ltd to continue to hold the specified properties for GLDT Pty Ltd. The title was so held in any event.
It was also resolved that Zina Pty Ltd be the nominee for the MLDT. No change was made to the land register.

The legislation

Argument before the Tribunal when reviewing the Commissioner’s decision, and before us on appeal, centred on how the provisions of the Duties Act 1999 applied to the circumstances of the variation of the Deed.
It is trite that in construing the Act we must have regard to the text, context, and purpose. Both counsel referred to the leading case of Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28. Counsel for the Commissioner submitted that the clear words of the Act required us to treat the transaction as a “relevant acquisition”.
Chapter 2 of the Act is directed at transfers as defined.[18] In its extended meaning it may be a declaration of trust. This term is defined.
[18] Ss 7 and 8
It was suggested by the respondent that if the circumstances were a Chapter 2 transfer then they couldn’t be a Chapter 3 transaction. Reliance was placed on section 77 which provides that duty is payable on certain transactions that are not dutiable transactions to which Chapter 2 applies. However, the reverse is also true as section 7(3) provides that a transfer does not include a transaction treated as a transfer by Chapter 3. It is possible that a transaction may be both and these provisions prevent it being taxed twice. Where the Commissioner ought to start the enquiry may depend on the circumstances, but in the usual situation a transaction will be a transfer and it is only when this seems unlikely that attention is given to Chapter 3, which on its face deals with a transaction that is not a transfer.
Some discussion occurred in the decision appealed from, as to whether the transaction may be a declaration of trust. It is evident from the advice provided at the time by specialist tax lawyers that the transaction was devised to ensure it was something short of a transfer.[19]
[19] See AB, page 841ff
It is not appropriate that we decide whether the transaction is a declaration of trust, but if it was, it would not be caught by Chapter 3.
It seems to us, as it may well have seemed to the Commissioner, that describing it as a Declaration of trust is problematic. There is a definition of Declaration of Trust as follows:
declaration of trust means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or people, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration.
Since the original decision, this question was explored in some detail in Commissioner for ACT Revenue v Leemhuis Investments Mitchell Pty Ltd (Appeal) [2023] ACAT 83.
Relevant provisions of Chapter 3 are as follows:
83 Interest and significant interest in landholders—pt 3.2
(1) For this part, a person has an interest in a landholder if the person has an entitlement (otherwise than as a creditor or other person to whom the landholder is liable) to a distribution of property from the landholder on a winding up of the landholder or otherwise.
(2) A person who, under subsection (1), has an interest in a landholder has a significant interest in the landholder if the person, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, would be entitled to—
(a) if the landholder is a private unit trust scheme—at least 20% of the property distributed; or
(b) if the landholder is a private company or wholesale unit trust scheme—at least 50% of the property distributed.
(3) In this section:
person includes an entity.
Note     Entity—see s 78A.
78A Meaning of entity—pt 3.2
(1) In this part:
entity means—
(a) a private company; or
(b) a private unit trust scheme; or
(c) a wholesale unit trust scheme.
Note     Private company, private unit trust scheme and wholesale unit trust scheme—see the dictionary.
84 How person acquires an interest in a landholder—pt 3.2
(1) For this part, a person acquires an interest in a landholder if the person obtains[20] an interest, or the person’s interest increases, in the landholder regardless of how it is obtained or increased.
[20] Emphasis added
(2) Without limiting subsection (1), a person may acquire an interest in a landholder—
(a) by any of the following:
(i) purchase, gift, allotment, issue or transfer of a share or unit in the landholder;
(ii) variation, abrogation or alteration of a right attaching to any such share or unit;
(iii) cancellation, redemption or surrender of any such share or unit;
(iv) variation, abrogation or alteration of a right of a holder of any such share or unit;[21]
[21] Emphasis added
(v) payment of an amount owing for any such share or unit; or
(b) by any combination of the means mentioned in paragraph (a).
(3) If the acquisition arises from an agreement to purchase, allot or issue a unit or share, the acquisition is made, for this part, when the agreement is completed.
(4) For subsection (3)—
(a) it does not matter whether or not the acquisition or interest acquired is registered; and
(b) an agreement is taken to be completed when the necessary transfer or title documents are delivered to the person acquiring the interest and the purchase price is paid in full.
(5) To remove any doubt, a person may acquire an interest in a landholder without acquiring shares or units in the landholder.
85 When does liability for duty arise?
A liability for duty charged by this part arises when a relevant acquisition is made.
86 What is a relevant acquisition?—pt 3.2
(1) For this part, a person is taken to have made a relevant acquisition if the person—
(a) acquires an interest in a landholder—
(i) that is of itself a significant interest in the landholder; or
(ii) that, when aggregated with other interests in the landholder held by the person or an associated person, results in an aggregation that amounts to a significant interest in the landholder; or
(iii) that, when aggregated with other interests in the landholder acquired by the person or other people in an associated transaction, results in an aggregation that amounts to a significant interest in the landholder; or
(b) having an interest described in paragraph (a) in a landholder, acquires a further interest in the landholder.
(2) For this part, a person in their capacity as a qualifying investor of a wholesale unit trust scheme is taken not to be an associated person of other qualifying investors in relation to the scheme.
Note         Associated person—see s 83A.
(3) In this section:
associated transaction, in relation to the acquisition of an interest in a landholder by a person, means an acquisition of an interest in the landholder by another person in circumstances in which—
(a) those people are acting in concert; or
(b) the acquisitions form, are evidence of, give effect to or arise from substantially 1 arrangement, 1 transaction or 1 series of transactions.
qualifying investor—see section 95D.

At the time the Act was passed, the Duties (Consequential and Transitional Provisions) Act 1999 was also enacted. It provided in section 11 that “the duty charged by Chapter 3 of the Duties Act is charged on transactions that occur on or after the commencement day”. Section 12 prohibited interest held beforehand being aggregated.
Both counsel correctly informed us that the Explanatory Statement with the Duties Bill in 1998 was not of much assistance in determining the purpose or intended meaning. The Legislation Act 2001 section 142 enables us to consider some extrinsic materials, and that includes the Hansard debate of the Presentation speech on 10 December 1998. It is informative and relevant parts are as follows:
Mr Speaker, this is a Bill for an Act to replace the existing Stamp Duties and Taxes Act 1987. The introduction of this Bill will provide further opportunities for consultation with the ACT community before the debate scheduled for next year.
The Bill is the result of the stamp duties rewrite project undertaken by the State revenue offices of New South Wales, Victoria, South Australia, Tasmania and the ACT in the past few years. This project aimed to produce, as far as possible, stamp duty legislation which is contemporary in language and presentation, simple to administer and, wherever practicable, consistent across the participating jurisdictions.
The Duties Bill closely follows the New South Wales Duties Act 1997 by adopting the same structure and chapter, part and division headings, as well as the same definitions of terms. Most of the provisions contained within the Bill are also identical to those contained in the New South Wales Act. The exemptions arise mainly from the adoption of ACT specific exemptions or a different ACT policy position on a small number of issues.
The Bill also aims to close a number of loopholes which exist in the current Stamp Duties and Taxes Act, particularly in the areas of trusts and the transfer of interests in ACT land through companies and trust units. Adoption of the ACT approach will result in a wider range of transactions being brought to duty, although the range of properties subject to duty will not increase significantly.
The expanded list of dutiable transactions includes declarations of trust, the surrender of dutiable property and the vesting of property by statute or court order. Also of significance is the emphasis on "transaction" compared with the emphasis under the current Stamp Duties and Taxes Act on "documents”.
Liability for duty also arises differently under the Duties Bill in respect of transfers of dutiable property, compared with the current Act. Under the current Act, in all but a small number of areas duty is document based and liability arises when documents are executed. Under the new Bill, it is a transaction rather than a document that is liable for duty and the important date is the date that the transaction occurred. Duty is therefore not dependent upon the execution of a document, which overcomes one of the ways duty could be avoided or deferred in the past.
…
Mr Speaker, under the current law, transfers of shares and units in ACT private companies and private unit trusts which own land in the ACT are subject to duty at conveyance rates on the underlying value of the land. These provisions were introduced to overcome an avenue of stamp duty minimisation based on the difference between conveyance rates, which range from 1.5 per cent to 5.5 per cent, and the marketable security rate of 0.6 per cent. Duty at conveyance rates could be avoided by transferring land ownership through the sale and purchase of shares in the land-owning company or trust.
It has come to the attention of the Commissioner of ACT Revenue that our current provisions are now being circumvented by the use of non-ACT companies and unit trusts to hold the land. In the case of unit trusts, units are no longer being transferred but are redeemed and later reissued to circumvent duty being paid on their transfer. To overcome these problems the Duties Bill, in line with New South Wales, has extended the landholding provisions to private companies incorporated and unit trusts established outside the ACT that own ACT land. The dutiable acquisition of an interest in a landholding company or unit trust has also been extended to include the issue and redemption of shares and units and the variation of rights attached to shares and units.
Such provisions will operate when a person or group of associated persons acquire more than a 50 per cent interest in a private company or trust which owns ACT land. The move to a majority interest test should limit the operation of the provisions to persons who can control the private company and trust and thereby effectively own the land.
…

The Reviewable decision

The original assessments by the Commissioner for each respondent were made on 10 December 2021.[22]
[22] They are contained in the Appeal Book (AB) as documents 53 and 74.
Objections were made and disallowed in the reviewable decision which was made on 22 August 2022.[23]
[23] The objections are located at AB, pages 740ff and 881ff, and are related to duty, interest and penalty.
The first ground of objection was that the assessment occurred 12 years after the relevant date. This was disallowed and the argument has not been revived.
The second ground of objection was that, because of the transaction of 4 March 2009, the respondents did not acquire an interest[24] in the Unit Trust (LUIT) under section 83(1).
[24] The highlighting is to emphasise the distinctions between the three arguments.
The third ground of objection was it did not acquire a significant interest under section 83(2).
The fourth ground of objection was it did not acquire a significant interest in the LIUT under section 86(1)(a)(i) and section 84.
The remaining grounds of objection related to imposition of penalty tax and interest.
The objections were disallowed by the Commissioner.[25] The reasoning of the Commissioner was that an interest (in a landholder) has been acquired by the Variation of the Trust. Section 84(5) provides that a person may acquire an interest in a landholder without acquiring shares or units. The taxpayer became entitled through the Variation to 100% of the distribution of the designated properties. Before, it was entitled to 50% of the overall trust fund pool. The new right is additional and separate from the preexisting interest. The language of section 86 was satisfied because the new entitlement itself was more than 20% of the entitlement on winding up. It was said that the taxpayer still has 50% but had an additional right, so there was a relevant acquisition of a significant interest, as the value of the land transferred was significant.
[25] The reviewable decision is at AB, pages 116–117
This argument encapsulates the original assessment. The argument is repeated in various forms in writing and orally by the Commissioner in its submissions before the Tribunal and on appeal.
The respondents’ objections are instructive. They put the case against the Commissioner’s conclusion thoroughly and persuasively. One point that was made was that the effect of the Commissioner’s approach was to retrospectively tax the preexisting entitlement. As we understand it, the creation of the Unit Trust if it occurred after 1999 would entitle the Commissioner to assess a duty based on the landholdings at the time. As creation of the Unit Trust happened before 1999 that did not and could not happen.
The reasons for decision of the Tribunal
On reviewing the Commissioner’s decision, the Tribunal allowed the respondent’s objections and set aside the imposition of duty, and consequently the imposition of penalty tax and interest. It accepted the arguments of the respondents and said:
34. The determinative criterion for duty to be imposed under chapter 3 is a person's proportionate entitlement to distribution of property as a percentage of all the property distributed. The identity of the property available for distribution is immaterial for chapter 3 purposes. While it is true that GLDT and MLDT acquired beneficial interests in the Specific Investments allocated to each of them, I accept the applicant's submissions that this did not trigger a liability for landholder duty under chapter 3 because they already had an entitlement to a distribution of 50% of all the property of LIUT before 4 March 2009 and their proportionate entitlement to a percentage share of all the property of LIUT remained materially unchanged immediately following the transactions on that date. The change in the nature of GLDT' s and MLDT' s interests in trust property, on which the Commissioner's case focussed attention, did not result in GLDT and MLDT acquiring a significant interest in LIUT they did not have already.
35. The applicant's submissions reproduced in paragraph 26 above correctly state the applicable test. Applying the test, I am satisfied that GLDT and MLDT did not make a 'relevant acquisition' on 4 March 2009 and accordingly were incorrectly assessed for duty under chapter 3. Whether the transactions attracted a liability for duty under chapter 2 does not arise for decision in this application.
The argument accepted at [26] was:
26. The applicant's argument is neatly encapsulated in the following extract from their written submission:
The tests in ss 83 and 86 are, respectfully, simple ones: where, as in this case, a person already had, prior to the relevant transaction, an "entitlement to a distribution of property from a landholder", what the landholder provisions call for is a simple comparison. What has to be compared is the person 's (unitholder 's) entitlement before the transaction with the person 's entitlement after the transaction. A comparison might show that the person had "acquired" another, separate "significant interest" (para (i) of s 86(l)(a)); or had acquired, on aggregation with the person 's other pre-existing interests, a "significant interest" (para (ii) of s 86(l)(b)); or had acquired a "fitrther interest", in addition to the person 's pre-existing "significant interest" (s 86(1)9b)). Had any of those three events occurred, the acquisition would have been a "relevant acquisition ", and landholder duty would have been rightly payable. But none of those three events (under s 86(1)) did occur on 4 March 2009 - and no landholder duty was payable as a result. [footnotes omitted]

Commissioner’s submissions on appeal

Counsel for the Commissioner made written and oral submissions. The written submissions commence with a thorough description of the background of the dispute and then describe the precise changes occurring on the relevant date of 4 May 2009.
It is submitted that the purpose of Chapter 3 is to capture transactions that do not satisfy Chapter 2 but have the effect of a constructive transfer. During oral argument, the parties agreed that the Explanatory statement was not helpful. As we have set out earlier, there is some assistance in the presentation speech. It is correct that the purpose was to close loopholes in a manner consistent with NSW and other jurisdictions and a specific loophole of unit trusts was referred to.
The Commissioner then analysed the events relating to the legislation. In her oral argument, she identified three steps as follows:
Yes, and these are very difficult - these sections are very difficult to - the drafting of them is difficult to reconcile, but the - so it's really a three-step process, from the Commissioner's point of view. It's just three steps. Step 1: there is an obtaining of an interest regardless of how, and that's section 84(1) and (2), in particular 84(1) and 84(2)(iv)…[26]
[26] Transcript of proceedings dated 22 April 2024, page 91, line 30
Step one focuses on the concept of acquisition. The Commissioner argues that there has been a right attaching to the units namely an entitlement to the specific properties. As was explained, that had not been present before due to clause 5A(a) of the Original Trust Deed. It is submitted that the variation of the trust deed, an event described in section 84, an “interest” had been acquired.
The second step was described as asking is there a relevant acquisition in the sense described in section 86.[27] It is argued that there is as the acquisition when added to the existing interest is more than 20%.
[27] Transcript of proceedings dated 22 April 2024, page 92, line 32ff
This is explained as follows:
So that's step 2. So you aggregate the interest obtained with the interest already held to make a significant interest. Now - and I might just - parenthetically to that, there is (b) - there is also (b) in 86(1) as well, which is - it's having an interest, acquires a further interest. So that's another way to do it. Now, an aggregation of the acquired interest with the previously held interest to amount to a significant interest.[28]
[28] Transcript of proceedings dated 22 April 2024, page 92, line 36
Step three asks “is it an interest as defined in s83?” It is argued as follows:
what we're looking at here is we're looking at - so immediately after the acquisition of the interest - if after - immediately after, on a winding up, they'd be entitled to more than 20 - at least 20 per cent of the property distributed.[29]
[29] Transcript of proceedings dated 22 April 2024, page 92, line 46ff
In the Commissioner’s written submissions these propositions are explained in more detail.
The written submissions are as follows:
The correct approach to the Key Issue
45. As an initial matter, the Commissioner below had noted that if the Scheme had not occurred, but the Annexure A properties been transferred to GLDT by way of a transfer from LIUT to GLDT, each transfer would have attracted ad valorem duty pursuant to sections 7, 10, 11, 20 of Chapter 2 of the Duties Act. Had each of the Annexure A properties been declared by LIUT to have been held on trust for GLDT, duty would have been attracted by the operation of sections 7,10, 11, 20 of Chapter 2.
46. In circumstances where it is not in dispute that as a result of and pursuant to the Transaction (as its admitted purpose) GLDT acquired pursuant to the Scheme Documents including the Deed of Variation a new type of right and by exercising that right, a new series of assets (referred to herein as the Varied Rights).
Section 84
47. The Varied Rights were obtained through the device of the Deed of Variation amending the Trust Deed (and ancillary Scheme Documents set out above) and constituted a variation, abrogation or alteration of a right of a holder of a share in the unit Trust LIUT. A ‘variation, abrogation or alteration of a right of a holder of a share or unit’ in a landholder (LIUT being a landholder) is an acquisition of an interest in a landholder within the meaning of section 84(2)(a)(iv) of the Duties Act.
Section 83
48. After the Transaction, GLDT had a significant interest in the landholder LIUT within the meaning of section 83 of the Duties Act by reason that it would be entitled to a distribution of at least 20% of the Property in the landholder LIUT.
49. As stated above, it was not in dispute below that the Annexure A Properties constituted approximately 50% of the property owned by LIUT.
Section 86
50. By the Scheme GLDT made a relevant acquisition within the meaning of section 86 of the Duties Act by reason that:
(i) It acquired within the meaning of section 84 an interest within the meaning of section 83 in the landholder LIUT being the interest in the Annexure A properties which is of itself a significant interest (ie an entitlement on distribution to at least 20% of the property): s 86(1)(a)(i) and/or
(ii) It acquired within the meaning of section 84 an interest within the meaning of section 83 in the landholder LIUT being the interest in the Annexure A Properties which when aggregated with other interests in LIUT held by GLDT results in an aggregation that amounts to a significant interest (ie an entitlement AB179 12 upon distribution to at least 20% of the property) in LIUT: section 86(1)(a)(ii); and/or
(iii) It had an interest in the landholder LIUT within the meaning of section 86(1)(a) and acquired within the meaning of section 84, a further interest in the landholder being the interest in the Annexure A Properties: s 86(1)(b).
51. GLDT thus by acquiring the beneficial interest in the Annexure A Properties acquired a significant interest in LIUT within the meaning of s 84 and s 86 of the Duties Act.
Conclusion on the Key Issue
52. The correct finding at law is that GLDT pursuant to the Scheme in which it newly acquired the beneficial interest in the Annexure A properties owned by the landholder LIUT made a relevant acquisition within the meaning of section 86 of the Duties Act and the Scheme is dutiable under the Act. Calculation of duty in respect of the acquisition.[30]
…

Respondents’ submissions on appeal

[30] Appellant’s outline of submissions on appeal received 8 December 2023, pages 11–12

The respondents submitted, as they had before the Original Tribunal and in the Objections as follows:
(a)Firstly, if the transactions amounted to possible dutiable transactions, they did so under Chapter 2 as the transactions were, if anything, transfers. If they were then Chapter 3 does not apply.
(b)Secondly, there is a distinction between what is an interest in a landholder and what is an interest in land.
(c)Thirdly, the transactions did not in form or in substance lead to any different share in the notional winding up on 4 March 2009. It followed there was no interest in a landholder acquired.
(d)Fourthly, in any event there was no increase in the preexisting interest as before and after the transaction they still held 50%. The Act is only concerned with taxing an increase, if there was one, not the whole value of the interest including the preexisting interests. A contrary conclusion would be retrospective as the initial interest in the landholder occurred before the Act which was to operate prospectively.

Consideration

It is correct to consider, firstly, has anything been acquired. The answer, as argued by the Commissioner, is yes. Previously, there was no entitlement to specific properties in the Trust for a unit holder. Now, there is, and it extends to getting paid income from the specific properties. This was achieved by a variation of the Original Trust Deed as contemplated by section 84. The key question is “was it an interest in a landholder?”. As submitted by the Commissioner, “a person may acquire an interest in a landholder without acquiring shares or units in the landholder”.[31] In clause 5A(d) of the original Deed, that might be done by reclassifying the existing units to alter their proportionate share. On determination of the trust, they had been entitled to a share in proportion to their unit holdings. That was and still is 50%.
[31] The Act s 84(5)
The transactions did not in their form say anything about a change in a percentage share of the assets of the trust on its winding up. There is no express reference to a percentage share at all.
The variation to the Deed instead purports to deal with land that was then held by the Trust. The trust was not wound up or determined then and landholdings might change. Before, the unitholders had an equitable interest in all the assets of the trust.
For the transaction to satisfy section 83, the Commissioner argues that whilst the form may not refer to a percentage change in substance on a winding up — as at 4 March 2009 — there is such a change. In money terms, there is not each get what they would get before (subject to the slight alteration explained above). On a winding up, the Trustee might sell and convert all the land into money. The new rights created might entitle but not require the respondents to ask to have the land transferred in specie. The value of that would be the same but, if and when that happened, there could arguably be a dutiable transfer. All sales to third parties would attract duty payable by the transferee.

In our view, what was acquired was not an interest in the landowner at all.
Assuming however that it was, the next question is, does it involve an event contemplated by sections 84 and 86.
How do they work? The first situation is where the taxpayer had no prior interest in the landholder but acquires a significant share (20%). Here, they already had a share namely 50%. The next situation is where the person has less than 20% but acquires an additional share that adds up to 20% or more then the transaction attracts a duty. Here, both respondents already had 50% so that is not what occurs.
The next situation is where the person already has a significant interest and obtains an “increase”.
Assuming there is an increase, the duty is payable not on the whole but on the increase. There are three reasons for this.
Firstly, section 84(1) uses the word “increase” and section 86(1)(b) refers to “further”.
Secondly, the unit holder would already have paid duty on the initial share or as here was immune from that as the Act is not retrospective.
Thirdly, such an interpretation is consistent with the Commissioner’s ruling provided at the hearing, being LHD 002.1 paragraph 37.
The examples given, in the ruling, make it clear that the amount that would be dutiable is the further interest so that it is the increase not the aggregate. Counsel for the respondent suggested this ruling did not apply because it referred to some new amendments to the Act. Whatever its genesis, it emphasised the clear language of the Act which distinguishes between single acquisitions and further interests and rules, as we do, that it is the increase in the interest in the landowner only that would be assessed.
There was no increase.
The Commissioner argues that there is a change not to the percentage share but to property owned by the trust that was property already owned assuming a winding up on 4 March 2009. There is a notional addition to the unitholder’s rights. On that argument, they have to pay duty on an amount that included all the entitlement they had beforehand. Not only is that counterintuitive[32] and unfair[33] as was impliedly admitted by counsel for the appellant, but it is also wrong.
[32] Transcript of proceedings dated 23 April 2024, page 148, line 8
[33] Transcript of proceedings dated 23 April 2024, page 164, line 19
If there is a dutiable transaction it involves a transfer under Chapter 2 as it involves not the percentage share of the proceeds on a winding up but, arguably, a transfer of an interest in the land in equity (not the landholder, as defined). The two concepts are distinct.
The appeals are dismissed.

Cross-Appeals

The Tribunal is bound by the decision of the ACT Supreme Court, CIC Australia Ltd v ACT Planning and Land Authority [2013] ACTSC 96.
While the respondents argued the case was wrong, they acknowledged that we must follow it. The events in this case do not enable a costs order to be made by reason of that decision. If there was a wider power, it would not lead to costs following the event as a matter of course but here the respondents point to a Calderbank letter that, they argue, would attract the exercise of such a discretion.
The cross-appeals must also be dismissed.

………………………..

President MT Daniel
For and on behalf of the Appeal Tribunal

Date(s) of hearing:

22 and 23 April 2024

Counsel for the Appellant:

Solicitors for the Appellant:

Counsel for the Respondent:

Ms N Obrart

ACT Government Solicitor

Mr T Grace and Mr M Gioskos

Solicitors for the Respondent:

King & Collins Lawyers