Victory International Pty Ltd v Commissioner of State Revenue

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

TAXATION LIST

S ECI 2023 05809

VICTORY INTERNATIONAL PTY LTD (ACN 153 434 809) AS TRUSTEE FOR THE VICTORY INTERNATIONAL HYBRID UNIT TRUST (ABN 17 813 624 975)	Appellant
v
COMMISSIONER OF STATE REVENUE	Respondent

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATES OF HEARING:	26 November 2024, 14 February 2025 (Mention) (Appellant’s memorandum concerning legislative history of the landholder provisions of the Duties Act 2000 (Vic) filed on 20 December 2024; Respondent’s response filed on 11 April 2025, and Appellant’s reply filed on 9 May 2025) (Respondent’s aide-mémoire – Duties Act2000 (Vic) s 89H(3) filed on 20 December 2024 and Appellant’s response filed on 23 December 2024)
DATE OF JUDGMENT:	13 August 2025
CASE MAY BE CITED AS:	Victory International Pty Ltd v Commissioner of State Revenue
MEDIUM NEUTRAL CITATION:	[2025] VSC 484

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TAXATION – Statutory construction – Landholder provisions in Part 2 of Chapter 3 of Duties Act 2000 – Where Commissioner assessed appellant trustee for transfer duty and penalty tax and interest in respect of ‘relevant acquisitions’ of interest by acquirers in a landholder – Where landholder is a ‘private unit trust scheme’ and acquirers are transferees of units in the unit trust – Where trustee purportedly has discretions in relation to distribution of trust property of the unit trust on a (statutory) winding up of the landholder under s 79(3) – Whether each of the acquirers has the requisite ‘entitlement’ to a distribution of property from, and thus an interest in, the landholder on a (statutory) winding up of the landholder – Whether each of the acquirers has a ‘significant interest’ in a landholder – Appeal dismissed – Duties Act 2000 (Vic), ss 3, 71, 72, 74, 77, 78, 79, 80, 85, 89H – CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98, applied.

TAXATION – Appeal from Commissioner’s determination disallowing appellant’s objection against an Assessment for landholder duty under Part 2 of Chapter 3 of the Duties Act 2000 – Where the Commissioner, by leave, advanced new or re-vamped basis to support the Assessment on appeal – Where the Commissioner acknowledged that there were ‘inaccuracies’ in the Assessment as made but says it nevertheless charged the correct amounts of duty, penalty and interest – Where Commissioner contends any error in the Assessment is immaterial – Whether it is appropriate to remit the Assessment to the Commissioner – Assessment remitted – Taxation Administration Act 1997 (Vic), ss 8, 109, 112.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr T Grace	Madgwicks Lawyers
For the Respondent	Mr C Young KC and Mr D Morgan	Solicitor for the Commissioner of State Revenue

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 4

The incorporation of Victory and establishment of the Victory Hybrid Unit Trust........... 4
The incorporation of ZJF Investments Pty Ltd and establishment of the ZJF Investments Trust................................................................................................................................................ 5
‘Memorandum of Project Cooperation’ entered into on 29 September 2011....................... 5
Purchase of Land by Victory as trustee on 21 November 2011.............................................. 7
Transactions on 10 October 2012 effectively transferred all of the issued shares and units to three trustee companies................................................................................................................ 7
Transaction diagrams: Aides mémoire............................................................................ 9

Settlement of the contract of sale on 28 February 2013 — Land transferred to Victory... 10
Investigation conducted by the Commissioner and determination of liability to duty, assessment of duty and imposition of penalty tax and interest on 30 September 2020............... 10
The Assessment.................................................................................................................. 12

Legislative framework.................................................................................................................... 12

Relevant provisions of the TAA................................................................................................ 12
Relevant provisions of the Duties Act...................................................................................... 14
The Court requested assistance from the parties as to the history of the legislative scheme.................................................................................................................................. 15

Timeline — overview of the history of the landholder provisions of the Duties Act 2000 (Vic).............................................................................................................................................. 16
The original land rich provisions were introduced in 1987........................................ 16
The land rich provisions were re-enacted in the new Duties Act 2000..................... 19
The land rich provisions were replaced by a new regime in 2004, and minor amendments were made in 2005 and 2007................................................................................ 22
In 2012 the land rich provisions were replaced by a landholder regime.................. 27
Division 1 — ‘Landholders’............................................................................................. 29
Division 2 – ‘Charging of duty’....................................................................................... 32

Grounds of objection...................................................................................................................... 39

Notice of Determination on 29 August 2023 disallows the Objection in full...................... 40

The issue on the appeal.................................................................................................................. 41

The appellant’s contention......................................................................................................... 41
The Commissioner’s contention............................................................................................... 42
The appellant says the Commissioner did not rely upon s 89H to support the Assessment.................................................................................................................................. 43
The Commissioner’s Determination on the Objection did mention s 89H in support of the Assessment............................................................................................................. 43

On the appeal, the Commissioner seeks to rely upon s 89H to support the Assessment 49
The appellant’s response to the Commissioner’s submissions on s 89H.................. 51
The Commissioner’s oral submissions in response on the ‘statutory path’ under s 79(1) and the second path involving the application of s 89H......................................... 54
The Commissioner’s aide-mémoire concerning s 89H(3)............................................ 59
The appellant’s response to the Commissioner’s aide-mémoire concerning s 89H(3) 60
At the mention held on 14 February 2025, the appellant did not oppose the respondent being granted such leave as may be required.............................................................. 62

The appellant’s response — s 89H is not directed to the creation of ‘entitlements’ or ‘interests’ and the ‘intended operation’ or ‘scheme’ of the landholder provisions has only ever been directed to targeting acquisitions of interests in companies and in ‘fixed’ unit trusts and does not apply to hybrid trusts................................................................................................. 66
The Commissioner’s reply — the hypothetical statutory winding up contemplated by s 79(3) involves a vesting of the Trust property in the Unit Holders — the Commissioner rejects the appellant’s ‘discretionary trust’ argument.................................................................... 70
The statutory winding up effected under s 79(3).......................................................... 70
The Commissioner’s response to the appellant’s ‘discretionary trust’ argument... 70

The Appellant’s reply submissions concerning the discretionary trust argument........... 73

Consideration and disposition of the appeal............................................................................. 75

Approach to the application of taxing provisions to transactions governed by trust deeds 75

The First Step: Ascertaining the terms of the trust upon which the Land was held.......... 76

The relevant terms of the Victory Hybrid Unit Trust deed.................................................. 77
The ‘A Class Units’ — confer voting rights................................................................... 79
The ‘B Class Units’ — confer the right to receive ‘Net Income’.................................. 79
The ‘C Class Units’ – the only units that confer the right to receive a distribution of ‘Capitalised Earnings’........................................................................................... 80
The ‘D Class Units’ — confer the right to receive ‘Net Income’ distributed by the Trustee in his sole discretion.................................................................................................. 80
The ‘Trust Fund’ and the exercise of the Trustee’s powers......................................... 81

The second step: Construing the statutory deﬁnitions in the Duties Act to ascertain whether the rights that each of the Transferees acquired pursuant to the 10 October 2012 Transactions entailed the acquisition of an interest in a landholder that is a significant interest, and thereby made a relevant acquisition, rendering Victory as trustee for the Victory Hybrid Unit Trust liable to pay landholder duty under s 77 of the Duties Act.............................................. 85

The legislative regime as it applies to landholders under private unit trust schemes..... 87
The Commissioner’s Assessment.................................................................................... 88
The Commissioner’s Determination on the Objection................................................. 89
The appellant’s case on the appeal.................................................................................. 90
The Commissioner’s submissions on the hearing of the appeal................................ 91
Did the Transferee unit holders acquire an ‘interest’ that was a ‘significant interest’ in the Victory Hybrid Unit Trust?.................................................................................. 94
The relevant concept of ‘winding up’............................................................................. 97
The relevant concept of ‘entitlement’............................................................................. 99
Do each of the Transferees have a ‘significant interest’ in a landholder?............... 106
The role and operation of s 89H....................................................................... 106

The Commissioner acknowledges that the Assessment is ‘inaccurate’ but says it nevertheless charged the correct amounts of duty, penalty and interest and any error in the Assessment is immaterial................................................................................... 111

Conclusion....................................................................................................................................... 113

Figure1: Structure of the Victory Hybrid Unit Trust immediately before 10 October 2012............................................................................................................................................ 114
Figure2: Structure of the Victory Hybrid Unit Trust immediately after 10 October 2012 114

HER HONOUR:

Introduction

This proceeding is brought by way of an appeal instituted under Part 10 of the Taxation Administration Act 1997 (Vic) (TAA) against a determination made by the respondent, the Commissioner of State Revenue (Commissioner) on 29 August 2023, disallowing the appellant taxpayer’s objection. The appellant’s objection, which was lodged against an assessment for duty made on 30 September 2020 (numbered 23568485) under the landholder provisions of the Duties Act 2000 (Vic), together with penalty tax and interest under the TAA, is treated as an appeal to this Court pursuant to s 106 of the TAA. On an appeal the taxpayer has the onus of proving the taxpayer’s case.[1]
[1]TAA s 110.

The proceeding arises from the purchase by Victory International Pty Ltd (ACN 153 434 809), in its capacity as trustee for the Victory International Hybrid Unit Trust (Victory and Victory Hybrid Unit Trust), of a property located at 484A Blackburn Road, Doncaster East, 3109, Victoria, being the whole of the land comprised in certificate of title volume 11333 folio 198[2] (the Land). The contract for the purchase of the Land was entered into on 21 November 2011 and when settlement took place on 28 February 2013, the Land was transferred to the appellant. On that transfer, the appellant paid transfer duty.[3]
[2]See Affidavit of John Yun (30.04.2024), 3 [10]. The contract of sale (CB1 Tab 35, 268–322, 270) describes the Land as being part of the land described in Certificate of Title v 8443 f 261 but the Transfer (CB2 Tab 85, 617) describes it as being the whole of the land in v 11333 f 198.
[3]Statement of Agreed Facts (Appellant’s Exhibit 1), [12]. See also Affidavit of John Yun (30.04.2024), [16].

However, following an investigation conducted by the Commissioner, it became clear that, prior to settlement in February 2013, by means of a suite of transactions which took place on 10 October 2012 (10 October 2012 Transactions), the two natural persons who had held all of the shares in Victory and all of the units in the Victory Hybrid Unit Trust at the time when the contract was entered into, no longer held those shares and units, and had effectively transferred all of their shares in Victory and all of their units in the Victory Hybrid Unit Trust respectively to three newly-formed trustee companies (the Transferees).

Once apprised of the 10 October 2012 Transactions, the Commissioner, on 30 September 2020, made an assessment of duty in respect of each of the three (alleged) relevant acquisitions in the Victory Hybrid Unit Trust — being the ‘JYP Acquisition’, ‘ZJF Acquisition’ and ‘LBZ Acquisition’ (together the ‘Relevant Acquisitions’) — and issued the assessment to Victory as trustee, alleging that the Victory Hybrid Unit Trust is liable to pay duty chargeable on each such relevant acquisition under the landholder provisions contained in Part 2 of Chapter 3 of the Duties Act.

Generally speaking, the purpose of the landholder provisions is to charge duty at the same rate as for a transfer of dutiable property under Chapter 2 of the Duties Act on certain acquisitions of interests in landholders (e.g., in companies or unit trusts, by way of transfers of marketable securities[4]) in circumstances where the acquisition would have been chargeable with transfer duty under Chapter 2[5] had there been a transfer of the land instead.
[4]At the relevant time, duty on transfers of marketable securities was at 0.6 per cent: Transcript 26.11.2024, 11 (Mr Grace).
[5]At the relevant time, the duty on transfers of land was at 5.5 per cent: Transcript 26.11.2024, 8 (Mr Grace).

In those circumstances, the question in this proceeding is, put simply, whether as a result of the 10 October 2012 Transactions, each of the Transferees has acquired an interest in a landholder, being the Victory Hybrid Unit Trust, that is or amounts to a ‘significant interest’ in the Victory Hybrid Unit Trust, and thereby has made a ‘relevant acquisition’ for the purpose of the landholder provisions of the Duties Act, with the result that the appellant (Victory, as trustee) is liable to pay the duty assessed by the Commissioner, together with the penalties and interest imposed, in respect of each of the three (alleged) relevant acquisitions. (The appellant acknowledges that if the Commissioner is correct, the landholder duty so assessed under Chapter 3 would be payable in addition to the transfer duty imposed under Chapter 2 on the direct transfer of the Land that was settled on in February 2013.[6])
[6]Transcript 26.11.2024, 10 (Mr Grace).

The appellant objects to the Commissioner’s assessment on the basis that it says no ‘interest’ was acquired by each of the three Transferees (for the purpose of the landholder provisions in the Duties Act), and that, accordingly, no ‘significant interest’ was obtained. In essence, the appellant submits that when regard is had to the terms of the trust deed of the Victory Hybrid Unit Trust, and in particular its definition of ‘Beneficiaries’ (which was not limited to unitholders[7]) and the many discretions, uncertainties and contingencies embodied in the deed, it is clear that no ‘interest’ was acquired by each of them.[8] The appellant says that it is ‘simply not possible to conclude ‘that the unitholders had [immediately after acquiring the units, or at any other time] an “entitlement” [as explained in s 79(1)] to a distribution of property on a notional winding [up of the landholder]’.[9] It contends that in the present case, the Commissioner fell into error because he equated an ‘acquisition of units with an acquisition of interests’.[10]
[7]Counsel said by reference to the evidence that ‘there were also other alive class of beneficiaries beyond the unitholders’: Transcript 26.11.2024, 9 (Mr Grace).
[8]Transcript 26.11.2024, 22–3 (Mr Grace).
[9]Ibid 31.
[10]Ibid.

For the reasons which follow, I am satisfied that the rights each of the Transferees acquired in a landholder, being the Victory Hybrid Unit Trust, pursuant to the 10 October 2012 Transactions entailed a ‘relevant acquisition’ under s 78 of the Duties Act. That is because on a statutory winding up of the landholder each of them, as holders of units, being ‘C Class Units’ (which are ‘Capital Units’) in a ‘unit trust scheme’ acquired an ‘interest’ in a landholder under s 79(1). The interest that each of the Transferees acquired was, of itself, and when aggregated with the significant interest of each of its associates, a ‘significant interest’ in the landholder under s 79(2), and was a ‘relevant acquisition’ under s 78(1), rendering Victory as trustee of the Victory Hybrid Unit Trust liable under s 85(1)(b) to pay landholder duty on each such relevant acquisition under s 77.

Accordingly, I would dismiss the appellant’s appeal. However, in circumstances where the Commissioner has, on the appeal, advanced a new or re-vamped basis on which he contends the appellant is liable for the amounts of duty that were claimed in the Assessment, and has acknowledged that the Assessment is inaccurate in a number of ways, it is nevertheless appropriate that the Assessment be remitted to the Commissioner.

Background

The factual background set out below is presented in the documents that were tendered by the appellant at the hearing.[11]
[11]Counsel for the appellant tendered the following documents (without objection by the respondent):
(a)Corrected version of Agreed Statement of Facts with revised dates and revised transaction diagram — dated 25.11.2024 (CB1 Tab 9, 100) – Appellant’s Exhibit 1;
(b)Agreed Note for the Court (13.09.2024) (CB1 Tab 10, 101) (relevant versions of the legislation and confirmation that appellant does not rely upon grounds 2, 3, 4 and 5) — Appellant’s Exhibit 2;
(c)Affidavit of John Yun (18.12.2023) (CB1 Tab 3, 70) – Appellant’s Exhibit 3;
(d)Affidavit of John Yun (30.04.2024) (CB1 Tab 14, 151) – Appellant’s Exhibit 4;
(e)Affidavit of interpreter, Peter Pei (18.02.2023) – Appellant’s Exhibit 5;
(f)Affidavit of interpreter, Yolanda Jin (30.04.2023) – Appellant’s Exhibit 6;
(g)Documents Filed Pursuant to Rule 7.06 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008, filed by the Commissioner (8.12.2023) (Rule 7.06 Documents filed by the Commissioner) —Appellant’s Exhibit 7.
There was no cross-examination of any of the deponents.

The incorporation of Victory and establishment of the Victory Hybrid Unit Trust

Victory was incorporated pursuant to the Corporations Act 2001 (Cth) (Corporations Act) on 27 September 2011 and the Victory Hybrid Unit Trust was established by a ‘Unit Trust Deed’ (Victory Deed) on the same date, with Victory named as the trustee.[12]
[12]Statement of Agreed Facts (Appellant’s Exhibit 1), [4] and CB1 Tab 27, 193–228.

Upon incorporation, the 100 issued shares in Victory were held by the following shareholders:[13]

·Kathryn Yang (51 shares); and
·Ningjun Liu (49 shares).

[13]Ibid [3].

Upon the establishment of the Victory Hybrid Unit Trust, there were four classes of units (A, B, C and D) with 100 issued units in each class, which were held by the following unitholders:[14]

·Kathryn Yang (51 A class units, 51 B class units, 51 C class units and 51 D class units); and
·Ningjun Liu (49 A class units, 49 B class units, 49 C class units and 49 D class units).

[14]Ibid Table 1.

The issue price of each unit (referred to in the Schedule to the Victory Deed as the ‘sum payment per unit’) was ‘One dollar ($1.00)’.[15]
[15]Appellant’s Exhibit 7, 69 (Schedule).

The incorporation of ZJF Investments Pty Ltd and establishment of the ZJF Investments Trust

Approximately two years prior to the incorporation of Victory and the establishment of the Victory Hybrid Unit Trust, the following events took place:[16]
[16]Statement of Agreed Facts (Appellant’s Exhibit 1), [1]–[2].

(a) on 18 August 2009, ZJF Investments Pty Ltd (ACN 138 940 726) was incorporated pursuant to the Corporations Act; and

(b) on 18 August 2009, the ZJF Investments Trust (ABN 21 098 714 986) was established by a Deed of Settlement.

At all relevant times, ZJF Investments Pty Ltd was the trustee for the ZJF Investments Trust and Jiefu Zheng was a beneficiary of the ZJF Investments Trust.

‘Memorandum of Project Cooperation’ entered into on 29 September 2011

Shortly after the incorporation of Victory and the establishment of the Victory Hybrid Unit Trust on 27 September 2011, Kathryn Yang and Ningjun Liu met with Jiefu Zheng and they reached an agreement as to the basis upon which they would jointly finance the acquisition of the Land by Victory. Those terms were recorded in a ‘Memorandum of Project Cooperation’ dated 29 September 2011 (MPC).[17]
[17]Affidavit of John Yun (30.04.2024), [10]. The MPC appears as Appendix A to the Objection Filed Pursuant to Rule 7.05 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 (8.12.2023) (Objection), see CB1 Tab 2, 11, 35–6. The MPC, which is dated 29.09.2011, recorded the ‘Participants’ as being ‘Kathryn Yang, Ningjun Liu and Jiefu Zheng’ and another person named ‘Jiang, Shu Lin’ was recorded as ‘Non-voting’. Mr Yun says that the MPC was executed on 29.09.2011.

The MPC recorded the ‘Subject of meeting’ as being ‘Cooperation to invest in 484A land in Melbourne Australia’ (i.e., the Land) and that the participants (named as being Kathryn Yang, Ningjun Liu and Jiefu Zheng) ‘agree to jointly finance the acquisition of the above land in Melbourne’ on the following basis: [18]
[18]MPC, CB1 Tab 2, 35–6 (emphasis in bold italics added).

1)        Investment and composition of shares
The total investment of the land is approximately A$10 million, of which the land price is $9,277,500. According to the contract of sale, the deposit is A$2 million and settlement is expected to be 16 months after signing of the contract.
2)In order to facilitate operation of the project, all shareholders agree to set up a company whose Chinese name is ‘Victory International Holding Pty Ltd’ (in Chinese) and English name is Victory International Pty Ltd. 52% [sic[19]] of the shares of the company are to be temporarily held by Kathryn Yang (of which 14% is Jiefu Zheng or of a nominated company) and 49% of the shares are held by Ningjun Liu (of which 12% is Jiefu Zheng or of a nominated company).
[19][Kathryn Yang only holds 51 of the 100 shares, so this figure should be 51%. This is confirmed by ASIC Form 484: Change to Company Details of Victory (CB2 Tab 66, 574) certified by John Yun. Under ‘Changes to the Register of Members’ of Victory on 10.10.2012, Kathryn Yang’s shareholding is shown as having decreased by 51 shares and zero shares are now held by her.]
After the discussions, it was agreed that 2 months prior to settlement, the shareholders must pay the capital of $10 million in accordance with their shareholding. After providing the capital, the shareholding of the company will be changed to the following proportions:
a)        Kathryn Yang or a nominated company — 37%;
b)        Jiefu Zheng or a nominated company — 26%; and
c)        Ningjun Liu or a nominated company — 37%.
3)In accordance with the agreement, the first and second instalments of A$2 million will be temporarily disbursed by Ningjun Liu and would be a loan to the other shareholders. Of which the loan of $740,000 to Kathryn Kang [sic] or a nominated company and the loan of $520,000 to Jiefu Zheng or a nominated company. The loan period is the date of advance to the actual repayment date but not to be later than 2 months prior to settlement. The interest is levied on the commercial loan interest of the National Bank for that period. If overdue, the loan interest rate is 14% per annum.
4)All expenses, signed by at least 2 shareholders (or its authorised representative) are valid.
5)If the project does not proceed to sales, if a shareholder withdraws halfway, it must assume all taxes and levies. The original shareholders would have the right of first refusal under the same conditions.
6)As the outstanding issues are finalised, the agreement is resolved.
7)This agreement is signed in triplicate and has legal effect and the Australian law applies.

It will be noted that the MPC was framed in terms of an ‘investment’, with each of the participants being ‘shareholders’ who would be ‘providing the capital’, and, in particular, the MPC recorded that the respective shareholdings in Victory would be changed after the shareholders provided the capital. Further, the participants’ agreement was to the effect that to facilitate the operation of the project, Victory would be ‘set up’ — however, by this point it had already been incorporated and the Victory Hybrid Unit Trust had also been established.

Purchase of Land by Victory as trustee on 21 November 2011

On 21 November 2011, a contract of sale was executed by Kathryn Yang with ‘Victory International Pty Ltd ACN 153 434 809 &/or nominee’ named as purchaser[20] and ‘F. & I. Schwartz (Constructions) Pty Ltd ACN 005 963 744’ named as vendor for the purchase of the Land at a purchase price of $9,277,500 (excl GST),[21] with settlement due ‘on 28 February 2013 or 12 months after the vendor gives notice to the purchaser of registration of the plan, whichever is the later’.[22]

Transactions on 10 October 2012 effectively transferred all of the issued shares and units to three trustee companies

[20]At some point, it is not clear when, it appears that Victory as trustee for the Victory Hybrid Unit Trust was nominated as the purchaser under the contract. A letter from Mr Tim Chen, a director of TT Accountants, the accountants for Victory ATF Victory Hybrid Unit Trust, dated 8.06.2017, states that the contract was ‘signed under the name of YANG, Kathryn on 18/11/2011 for $9,277,500, and nominated to Victory International Pty Ltd ATF Victory International Hybrid Unit Trust before the settlement date of 28/02/2013’, see CB1 Tab 33, 266.

[21]Statement of Agreed Facts (Appellant’s Exhibit 1), [5].

[22]Affidavit of John Yun (30.04.2024), [12]; See also CB1 Tab 35, 271.

After entry into the contract of sale, but before settlement, several transactions took place concerning the shares in Victory and the units in the Victory Hybrid Unit Trust.

By means of the 10 October 2012 Transactions, each of Kathryn Yang and Ningjun Liu effectively transferred all of their shares and all of their units to three trustee companies, being respectively JY Property Pty Ltd[23] as trustee for JY Property & Investments Trust (JYPI Trust),[24] ZJF Investments Pty Ltd[25] as trustee for ZJF Investments Trust,[26] and LBZ Pty Ltd[27] as trustee for LBZ Investment Trust,[28] (together, Transferees) as follows:[29]
[23]JY Property Pty Ltd was registered as a proprietary company limited by shares on 11.09.2012, see CB1 Tab 16, 161.
[24]The JYPI Trust was established as a discretionary investment trust by Deed of Settlement dated 11.09.2012, see CB2, Tab 43, 377; Tab 87, 620; Statement of Agreed Facts (Appellant’s Exhibit 1), [9].
[25]ZJF Investments Pty Ltd was registered as a proprietary company limited by shares on 18.08.2009, see CB1 Tab 15, 158.
[26]The ZJF Investments Trust was established as a discretionary investment trust by Deed of Settlement dated 18.09.2009, see CB2, Tab 54, 524; Tab 86, 619; Statement of Agreed Facts (Appellant’s Exhibit 1), [2].
[27]LBZ Pty Ltd was registered as a proprietary company limited by shares on 25.01.2012, see CB1 Tab 18, 168; Statement of Agreed Facts (Appellant’s Exhibit 1), [6].
[28]The LBZ Investments Trust was established as a discretionary investment trust by Deed of Settlement dated 25.01.2012, see CB2, Tab 44, 402; Tab 88, 621; Statement of Agreed Facts (Appellant’s Exhibit 1), [7].
[29]Statement of Agreed Facts (Appellant’s Exhibit 1), [10].

(a) As to the 100 issued shares in Victory—

(i) on 10 October 2012 Kathryn Yang transferred her 51 shares as follows:

· 37 shares were transferred to JY Property Pty Ltd as trustee for JYPI Trust;[30] and
[30]It is an agreed fact that at all relevant times, Kathryn Yang was a beneficiary of the JYPI Trust. Statement of Agreed Facts (Appellant’s Exhibit 1), [8].

· 14 shares were transferred to ZJF Investments Pty Ltd as trustee for ZJF Investments Trust;[31]
[31]It is an agreed fact that at all relevant times, Jiefu Zheng was a beneficiary of the ZJF Investments Trust. Statement of Agreed Facts (Appellant’s Exhibit 1), [1].

(ii) on 10 October 2012 Ningjun Liu transferred her 49 shares as follows:

· 37 shares were transferred to LBZ Pty Ltd as trustee for LBZ Investment Trust;[32] and
[32]It is an agreed fact that at all relevant times, Ningjun Liu was a beneficiary of the LBZ Investments Trust. Statement of Agreed Facts (Appellant’s Exhibit 1), [6].

· 12 shares were transferred to ZJF Investments Pty Ltd as trustee for ZJF Investments Trust.

(b) As to the 400 issued units in the Victory Hybrid Unit Trust−

(i) on 10 October 2012 Kathryn Yang transferred her 51 A Class, B Class, C Class and D Class Units as follows:

· 37 A Class, B Class, C Class and D Class Units were transferred to JY Property Pty Ltd as trustee for JYPI Trust; and

· 14 A Class, B Class, C Class and D Class Units were transferred to ZJF Investments Pty Ltd as trustee for ZJF Investments Trust;

(ii) on 10 October 2012 Ningjun Liu transferred her 49 A Class, B Class, C Class and D Class Units as follows:

· 37 A Class, B Class, C Class and D Class Units were transferred to LBZ Pty Ltd as trustee for LBZ Investment Trust; and
· 12 A Class, B Class, C Class and D Class Units were transferred to ZJF Investments Pty Ltd as trustee for ZJF Investments Trust.

Transaction diagrams: Aides mémoire

At the request of the Court, the parties prepared a set of simplified diagrams illustrating the unitholdings in the Victory Hybrid Unit Trust immediately before and immediately after the 10 October 2012 Transactions, a copy of which is reproduced in the Appendix to these reasons.[33] These diagrams are aids only and are not agreed facts or evidence.
[33]Statement of Agreed Facts (Appellant’s Exhibit 1), [13]–[15].

Figure 1 in the Appendix shows the unitholdings in the Victory Hybrid Unit Trust immediately before the 10 October 2012 Transactions and Figure 2 shows the unitholdings immediately after those transactions took place.

The result of the 10 October 2012 Transactions was that there was a transfer of 100% of the issued units in the Victory Hybrid Unit Trust. The appellant accepts that at this time it was the purchaser under the contract of sale. It is an agreed fact that at the time of those transactions the appellant was deemed by s 74(1) of the Duties Act[34] to hold the Land and the Victory Hybrid Unit Trust was deemed to be a ‘landholder’[35] for the purposes of the landholder provisions of the Duties Act.[36]
[34]Section 74(1) provided:
74Effect of uncompleted agreements
(1)For the purposes of this Part, the vendor and purchaser under an uncompleted agreement for the sale of land are taken to be separately entitled to the whole of the land.
[35]The meaning of ‘landholder’ is set out in s 71 of the Duties Act.
[36]Statement of Agreed Facts (Appellant’s Exhibit 1), [11].

Settlement of the contract of sale on 28 February 2013 — Land transferred to Victory

On 28 February 2013, the contract settled and the Land was transferred to the appellant. On that transfer, the appellant paid transfer duty.[37]
[37]Ibid [12]. See also Affidavit of John Yun (30.04.2024), [16]. The copy of the Transfer of Land included in the Court Book (Tab 85, 617–18) is undated but it was executed by Victory in accordance with s 127 of the Corporations Act 2001, by Ningjun Liu and Kathryn Yang in their capacity as directors.

On 4 April 2013, Victory became registered as the sole proprietor of the Land.

Investigation conducted by the Commissioner and determination of liability to duty, assessment of duty and imposition of penalty tax and interest on 30 September 2020

Following an investigation by the Commissioner into compliance with Part 2 of Chapter 3 of the Duties Act, an SRO ‘Revenue Specialist, Landholder Acquisitions’ officer notified the solicitor for the appellant by an ‘exit letter’ dated 30 September 2020 that based on the information provided, the Commissioner had made the following determinations:[38]
[38]CB2, Tab 70, 585–7.

Liability to duty under Part 2 of Chapter 3 of the [Duties] Act
The Commissioner has determined that the JYP Acquisition, ZLF Acquisition and LBZ Acquisition each constitute a relevant acquisition in the Trust under section 78(1)(a)(i), for the following reasons:
(a)The Trust constitutes a ‘unit trust scheme’ as defined in section 3(1) and a landholder under section 71(1)(a);
(b)JYP,[39] ZLF[40] and LBZ[41] each acquired an ‘interest’ in the Trust within the meaning of section 79(1), commensurate with the percentage of Capital Units so acquired, by virtue of clauses 3.26.5 [sic[42]], 17.4 and 17.5.2 of the Trust Deed. The evaluation of a person’s entitlement under section 79(1) is concerned with entitlements as a matter of law and is made on a notional winding up of the Trust immediately after the Acquisitions. That evaluation is not concerned with what a person would receive (if anything) on an actual vesting of the Trust or whether the Voting Unit Holders would then direct the trustee to distribute property to persons other than the holders of Capital Units under clause 17.7 of the Trust Deed.
[39]Apparently a reference to the entity ‘JY Property Pty Ltd’ described above.
[40]Apparently a reference to the entity ‘ZJF Investments Pty Ltd’ described above.
[41]Apparently a reference to the entity ‘LBZ Investment Pty Ltd’ described above.
[42][As cl 3.26.5 refers to ‘D Class Units’, this appears to be a typographical error and should be a reference to cl 3.26.4 which deals with C Class Units or ‘Capital Units’.]
. . .

Imposition of penalty tax and calculation of interest under Part 5 of the Tax Administration Act 1997 (Vic) (TAA)
The Trust is liable to pay duty chargeable on each Acquisition under Part 2 of Chapter 3 of the Act.[43] Duty was required to be paid by 9 November 2012 (being, 30 days after the date of each Acquisition).[44] As payment was not made by this date, a tax default arose under the TAA and the Trust became liable to pay penalty tax and interest on unpaid tax.[45] Having regard for the information provided, the Commissioner has made the following determinations on penalty tax and interest in accordance with Revenue Ruling TAA.007v4:
[43]CB2, Tab 70, 585–7, citing Act, section 85.
[44]Ibid, citing Act, section 84.
[45]Ibid, citing TAA, sections 24 and 29.
(a)the Commissioner has reduced the penalty tax rate from 25% to 20% of the unpaid tax on each Acquisition, pursuant to section 31(2) of the TAA. The sum of penalty tax payable on the Acquisitions is $99,000.
(b)The Commissioner has remitted in full the premium rate of interest.
(c)The Commissioner recognises that he has not provided the Trust with a decision on the duty implications of the Acquisitions in a timely manner. As a consequence, the Commissioner considers it appropriate to remit the market rate of interest for the period from 8 August 2018 to 6 February 2020 (inclusive). However, no exceptional circumstances exist for the remission of the market rate of interest for the following periods:
(i)9 November 2012 to 8 August 2018; and
(ii)6 February 2020 to 30 September 2020.

(d)Market interest is imposed as a means of compensating the Victorian Government for being denied funds to which it is entitled. Accordingly, the sum of market interest payable on the Acquisitions is $72,102.44.[46]

Assessment made and issued pursuant to section 8(1) of the TAA
In accordance with the above determinations, please find enclosed Assessment 23568485, displaying the following amounts payable:
[46]For details of the market rates of interest for the relevant periods, see < Assessment
The assessment for duty that accompanied the exit letter was styled as ‘Duties Act 2000 Notice of Assessment 23568485’ (Assessment) made on 30 September 2020. The Assessment, which was ‘for duty under the Duties Act 2000 and penalty tax and interest under the [TAA]’ was issued pursuant to s 8(1) of the TAA to Hailes Lawyers on behalf of Victory as trustee for the Victory Hybrid Unit Trust, ‘in respect of three relevant acquisitions made by the following persons in the [Victory Hybrid Unit Trust] on 10 October 2012’:[47]
[47]CB1 Tab 5, 77.
The Assessment stated that ‘Payment is due by: 30 November 2020’.
Legislative framework
Relevant provisions of the TAA
The parties are agreed that for the purposes of this proceeding the applicable version of s 112 of the TAA (which deals with ‘Supreme Court appeals’) is authorised version no. 86 (effective as at 1 July 2024).[48] Section 112 provides as follows:
[48]Agreed Note for the Court (13.09.2024), 1 [2]; CB1 Tab 10, 101.
112 Supreme Court appeals
(1)On the hearing of an appeal by the Supreme Court, the Court may make any order it thinks fit and may by order confirm, reduce, increase or vary the assessment or decision.
(2) The costs of the appeal are in the discretion of the Court.
As the exit letter records that the Assessment was ‘made and issued’ pursuant to s 8(1) of the TAA it is also convenient to set out some other provisions of the TAA that may be of relevance to the appeal. In each case the text of the provisions is reproduced from authorised version no. 86.
Section 8 of the TAA deals with the Commissioner’s ‘General power to make assessment’. Section 8(1) provides:
(1)The Commissioner may make an assessment of a tax liability of a taxpayer.
The expressions ‘assessment’, ‘tax’, ‘taxation law’, ‘tax liability’ and ‘taxpayer’ are defined in s 3(1) of the TAA, relevantly as follows:

3        Definitions
(1)       In this Act—
assessment means an assessment made by the Commissioner under Part 3 of the tax liability of a person, and includes a reassessment, a compromise assessment and a deemed assessment;
. . .
tax means a tax, levy, contribution or duty under a taxation law, and includes—
(a)       interest and penalty tax under Part 5;
(b)any other amount paid or payable by a taxpayer to the Commissioner under a taxation law (other than section 129A);
taxation law has the meaning given by section 4;
. . .

tax liability means a liability to pay tax;
taxpayer means a person who has been assessed as liable to pay an amount of tax, who has paid an amount as tax or who is liable or may be liable to pay tax;

Section 14, which deals with a notice of assessment (or withdrawal of assessment), relevantly provides:

(1)If the Commissioner makes or withdraws an assessment, the Commissioner must serve a notice of assessment or withdrawal on the taxpayer.

(1A)     . . .
(2)       A notice of assessment must—
(a)       be expressed to be an assessment of liability to the tax; and
(b)       show the amount of tax assessed.

(2A) …
(3)An amount of tax assessed in a notice of assessment is payable on or before the day specified by the Commissioner in the notice of assessment.

Section 17 provides for the validity of an assessment, as follows:

17 Validity of assessment
The validity of an assessment is not affected because a provision of a taxation law has not been complied with.

Section 127 of the TAA, which is a ‘conclusive evidence’ provision, provides as follows:

127 Evidence of assessment
Production of a notice of assessment, or of a document signed by the Commissioner purporting to be a copy of a notice of assessment, is—
(a) conclusive evidence of the due making of the assessment; and
(b)conclusive evidence that the amount and all particulars of the assessment are correct, except in objection, review or appeal proceedings (in which it is proof in the absence of evidence to the contrary).

Part 10 of the TAA, which contains ss 96–116, is headed ‘Objections, reviews and appeals’.

Relevant provisions of the Duties Act

The ‘landholder’ provisions with which the Court is concerned in this proceeding were introduced in 2012 but have their genesis in the ‘land rich’ provisions that were first enacted in 1987, effectively as an anti-avoidance measure.

The Commissioner agrees with the appellant that, for the purposes of this proceeding, it is necessary to apply the provisions of the Duties Act as it stood at the time of the relevant transactions on 10 October 2012. Accordingly, the parties are agreed that authorised version no. 90 of the Duties Act, incorporating amendments as at 27 September 2012, is the relevant version.[49]
[49]Agreed Note for the Court (13.09.2024), 1 [1]; CB1 Tab 10, 101.

In BPG Caulfield Village Pty Ltd v Commissioner of State Revenue,[50] Croft J outlined the background to the introduction of the land rich provisions in 1987 and the landholder provisions that replaced them in 2012, as follows:[51]

As stamp duty was, historically, imposed on instruments transferring land, no duty was payable where a taxpayer purchased the owner of the land, but not the land itself. The obvious way of achieving this was the acquisition of shares or units in a private company or unit trust that itself owned the land. Clearly, the possibility of acquisition of the land owner itself had the potential for significant erosion of the stamp duty revenue base. Consequently, in order to bring such transactions to duty, Victoria enacted land rich duty provisions in 1987.[52] The effect of these provisions was to impose duty on certain acquisitions of interests in a company 80 per cent or more of the value of which consisted of real property. In 2000, the land rich provisions became Div 1 of Pt 2 of Ch 3 of the Duties Act 2000. They were, however, repealed in 2012 when the present landholder provisions, including the economic entitlement provisions, were enacted by the Duties Amendment (Landholder) Act 2012 (‘the Amendment Act’).

[50](2016) 103 ATR 1 (BPG Caulfield Village).

[51]BPGCaulfield Village (2016) 103 ATR 1, 10 [20].

[52]Ibid, citing Taxation Acts Amendment Act 1987, inserting ss 75–75O into the Stamps Act 1958.

His Honour also emphasised ‘that the history of the development of these provisions is relevant to an understanding of the present provisions to the extent that there is ambiguity in those provisions and resort might otherwise properly be made to extrinsic material’[53] and that ‘to appreciate the extrinsic material insofar as it is relevant, such as Second Reading Speeches and Explanatory Memoranda, some appreciation of the legislative history is important’.[54]
[53]BPG Caulfield Village (2016) 103 ATR 1, 10 [21].
[54]Ibid.

The Court requested assistance from the parties as to the history of the legislative scheme

During the hearing of the appeal, it became clear from the rival submissions advanced by the parties, and their consensus that there was an absence of any case law that might assist as to the proper construction of the key provisions, that it was necessary for the Court to have an understanding of the legislative history of both the landholder provisions and the predecessor land rich provisions. Accordingly, during the hearing, the Court requested that the parties provide some assistance as to the legislative history of the landholder provisions, outlining the relevant iterative changes made by Parliament over time with a view to enhancing the effectiveness of those provisions so as to ensure that an appropriate amount of tax is collected on all transactions in property involving land. To that end, following the substantive hearing, each of the parties filed a memorandum concerning the legislative history on the (respective) dates noted on the cover sheet to these reasons.

The legislative history outlined below is, for the most part, a synthesis of the legislative history material provided by the parties.

Timeline — overview of the history of the landholder provisions of the Duties Act 2000 (Vic)
The original land rich provisions were introduced in 1987

The Taxation Acts (Amendment) Act 1987 introduced the land rich provisions by inserting a new subdivision (7) into Division 3 of Part II of the Stamps Act1958 (Vic) headed ‘Duty on change of control of certain land-owning corporations and unit trusts’. The Explanatory Memorandum to the Taxation Acts Amendment Bill 1987 stated the purpose of the new subdivision (7) as being[55]

to close a significant loophole whereby conveyance duty is avoided through the use of company shares and private unit trusts. It treats the transactions concerned as dutiable transfers of land. There are however certain criteria which must be met before the provisions apply…

[55]Explanatory Memorandum, Taxation Acts Amendment Bill 1987 (Vic) 1; Appendices to the Appellant’s Memorandum on the Landholder Provisions (20.12.2024), Appendix 8, 378.

The new land rich provisions introduced by these amendments took effect on 15 November 1987[56] and applied to acquisitions of shares in private corporations and units in private unit trust schemes.
[56]Taxation Acts Amendment Act 1987 s 2(10).

Section 75H charged duty on a statement required to be made where a person, by a ‘relevant acquisition’, acquired a majority interest or further interest in an unlisted landholder having real property in Victoria with an unencumbered value of not less than $1,000,000 and where the value of its property was 80% of all of its property.[57] As the Commissioner noted in his memorandum:[58]

A relevant acquisition was an acquisition of an interest that alone, or when relevantly aggregated, constituted a majority interest in a corporation. An increase of an existing majority interest was also deemed to be the acquisition of a majority interest.[59]
Interest was defined by s 75K to be a ‘shareholding in the corporation that would entitle the person and any related person, if the corporation were to be wound up after the shareholding was acquired, to participate (otherwise than as a creditor or other person to whom the corporation was liable) in a distribution of the property of the corporation.’
An entitlement to participate in the distribution of the property of a corporation on a winding up was defined in s 75(6) to be the greater of (a) the amount calculated as if the winding up were carried out in accordance with the memorandum and articles of association of the corporation and any relevant law, and (b) the amount calculated as if the person had exercised all relevant powers and discretions in such a manner as to maximize that amount.

[57]Stamps Act 1958 (Vic) ss 75G, 75L(1)–(2).

[58]Commissioner’s Response to Appellant’s Memorandum of 20 December 2024 (11.04.2025), 5 [14]–[16] (citations omitted) (Commissioner’s Memorandum in Response (11.04.2025)).

[59]Ibid citing section 75J.

Relevantly, for present purposes, at the time when subdivision (7) was inserted, the Stamps Act 1958 already included a definition of ‘unit trust scheme’ in s 3, which had been inserted by s 2(c) of the Stamps (Further Amendment) Act 1961 (Vic) as part of the definitions supporting the imposition of ‘marketable securities duty’.[60] The definition of ‘unit trust scheme’ in s 3 was framed as follows:[61]

‘Unit trust scheme’ means any arrangements made for the purpose, or having the effect, of providing, for persons having funds available for investment, facilities for the participation by them, as beneficiaries under a trust, in any profits or income arising from the acquisition holding management or disposal of any property whatsoever pursuant to that trust.

[60]Appellant’s Memorandum on the Landholder Provisions (20.12.2024), 11 [26].

[61]Stamps (Further Amendment) Act 1961 (Vic), (No. 6791), s 2(c).

Amongst the suite of provisions introduced in 1987 by subdivision (7), s 75N dealt with ‘Unit trust schemes’. Section 75N(3) provided for subdivision (7) to apply to a private unit trust scheme as if[62]

(a) the private unit trust scheme were a corporation; and
(b) a unit in a private unit trust scheme were a share in a corporation; and
(c)the acquisition of units in a private unit trust scheme were the acquisition of shares in a corporation; and
(d)a reference to the Memorandum and Articles of Association of a corporation were a reference to the constituent documents of a private unit trust scheme; and
(e)a reference to a winding up of a corporation were a reference to a termination of a private unit trust scheme.

[62]Emphasis in bold italics added.

Section 75N also included bespoke definitions of ‘Private unit trust scheme’, ‘Unit’, and ‘Unit trustee’ for the purposes of s 75N, as follows:

‘Private unit trust scheme’ means a unit trust scheme if, at the time of the acquisition of a unit, the deed relating to the scheme—
(a)has not been approved for the purposes of Division 6 of Part IV of the Companies (Victoria) Code or the corresponding provisions of the law in force in another State or Territory; or

(b) has been so approved but—
(i) no units have been issued to the public; or
(ii)fewer than 50 persons are beneficially entitled to units under the scheme; or
(iii)20 or fewer persons are beneficially entitled to 75 per centum or more of the total issued units under the scheme.

‘Unit’ means any right or interest, whether described as a unit or sub-unit or otherwise, of a beneficiary under a unit trust scheme, and includes an interest in a unit but does not include a unit acquired solely pursuant to an arrangement referred to in section 75O(b).[63]
‘Unit trustee’ means a trustee of a private unit trust scheme.

[63]I note that s 75O(b) deals with financing arrangements to which sub-division (7) is expressed not to apply to or in relation to in certain circumstances.

Further, s 75N(2) provided, ‘[f]or the purposes of the definition of “private unit trust scheme”’, a measure for determining the number of persons beneficially entitled to units, framed as follows:

(2)For the purposes of the definition of ‘private unit trust scheme’ and determining the number of persons beneficially entitled to units—
(a) units to which—
(i) a corporation; or
(ii)a person who is entitled to more than 50 per centum of the issued share capital of the corporation; or

(iii) a related corporation—

is entitled shall be deemed to be held by one person; and

(b) units to which—
(i) a trustee of a trust (including a unit trust scheme); or
(ii)if the trust is a discretionary trust, a person who has an entitlement on the distribution of that trust; or
(iii)a person whose share or interest in the trust, whether vested or contingent, constitutes more than 50 per centum of the trust property or of the issued units in the trusts

is entitled shall be deemed to be held by one person.

The land rich provisions were re-enacted in the new Duties Act 2000

The Stamps Act 1958 (Vic) was replaced by the Duties Act in 2000, with effect from 1 July 2001.

Section 5 of the Duties Act states that the Act is to be read together with the TAA, which provides for the administration and enforcement of the Duties Act and other taxation laws.

As the Commissioner explained in his memorandum concerning the legislative history, when first enacted, the Duties Act included land rich provisions in Divisions 1–4 of Part 2 of Chapter 3, and ‘[t]he primary change from the Stamps Act was that duty was charged on the making of a relevant acquisition[64] rather than on a statement required to be given when such an acquisition was made’,[65] reflecting the change made by the Duties Act in 2001 from an instrument-based regime to a transaction-based one.
[64]Commissioner’s Memorandum in Response (11.04.2025), 6 [20] citing s 78.
[65]Ibid, discussing Duties Act s 78.

The Explanatory Memorandum for the Bill that introduced the Duties Act in 2000 outlined the position, as follows:[66]

General
The object of this Bill is to replace the Stamps Act 1958 with a modern statute expressed in clear language and with a more contemporary conceptual foundation. With this Bill liability to pay duty is shifted from the execution of a paper instrument, to the completion of a transaction which may or may not be reduced to writing. . . .
The Bill is based on provisions that are broadly uniform across Australia; New South Wales and the Australian Capital Territory having passed duties legislation and most other Australian jurisdictions proposing to do so in the near future.
The existing stamp duties are replaced by the following duties-
•duty on transfers and transactions concerning dutiable property (Chapter 2);
•an anti-avoidance provision, charging duty at the rate applicable to transfers of land on the acquisition by a person of an interest consisting of certain shareholdings in a private company, or unitholdings in a unit trust scheme, which has substantial land holdings (Chapter 3);
[66]Explanatory Memorandum, Duties Bill 2000 (Vic) 1; Appendices to the Appellant’s Memorandum on the Landholder Provisions (20.12.2024), Appendix 17, 684–5.

. . .
The proposed Act will be a ‘taxation law’ for the purposes of the Taxation Administration Act 1997 and is to be read together with that Act. . . .
CHAPTER I-PRELIMINARY
. . .
Clause 3 provides definitions of words and expressions used in the Bill.
. . .

Amongst the suite of definitions that were included in s 3(1) of the Duties Act 2000 was a definition of ‘unit trust scheme’ and a definition of ‘unit’ in a unit trust scheme, framed as follows:

unit trust scheme means any arrangements made for the purpose, or having the effect, of providing, for persons having funds available for investment, facilities for the participation by them, as beneficiaries under a trust, in any profits, income or distribution of assets arising from the acquisition, holding, management or disposal of any property whatever pursuant to the trust;

unit in a unit trust scheme means—
(a)a right or interest (whether described as a unit or a sub-unit or otherwise) of a beneficiary under the scheme; or
(b)a right to any such right or interest;

More will be said about these definitions below. For present purposes it is sufficient to note that the definition of ‘unit trust scheme’ (above) replicated for the most part the definition of ‘unit trust scheme’ that was inserted in the Stamps Act 1958 by the Stamps (Further Amendment) Act 1961, but now (from 2000) it also included a reference to ‘distribution of assets’ in the phrase ‘any profits, income or distribution of assets arising from the acquisition’ whereas formerly it simply referred to ‘any profits or income arising from the acquisition …’.[67]
[67]See Duties Act s 3(1); cf Stamps (Further Amendment) Act 1961 (Vic), (No. 6791), s 2(c).

In his memorandum concerning the legislative history, the Commissioner explained that under the land rich provisions that were re-enacted in the new Duties Act 2000:[68]
[68]Commissioner’s Memorandum in Response (11.04.2025), 6–7 [21]–[24] (citations omitted).

A relevant acquisition was defined to be the acquisition of an interest in a land-rich private corporation that was in itself, or when relevantly aggregated, a majority interest.[69] Interest was defined by s 76(1):
[69]Ibid citing s 79(1).
A person has an interest in a private corporation if the person has an entitlement (otherwise than as a creditor or other person to whom the corporation is liable) to a distribution of property from the corporation on a winding up of the corporation or otherwise.

A majority interest was defined to be an entitlement to more than 50% of the property distributed.[70] Because of the definition of ‘entitled’ in s 3,[[71]] a person could only acquire a majority interest if they were beneficially entitled to more than 50% of the property distributed. This requirement has since been removed but is important for understanding two of the authorities discussed below.[[72]]
The provisions applied to unit trust schemes because a ‘private corporation’ was defined to include a ‘private unit trust scheme’.[73] The definition of private unit trust scheme was materially the same as under the Stamps Act.
The [Duties Act] as originally enacted did not include a definition of ‘winding up’,[[74]] however the maximisation of entitlements provision in s 85 required a comparison between two calculations, the first of which was to be made based on a distribution carried out in accordance with the constitution of the private corporation and any law relevant to the distribution. The second calculation was made after the relevant person and any other specified person had exercised all powers and discretions in such a manner as would maximise the value of the entitlement. In other words, s 85 as initially enacted was in very similar terms to the current s 89H.

The land rich provisions were replaced by a new regime in 2004, and minor amendments were made in 2005 and 2007

[70]Ibid citing s 76(2).

[71]In the Duties Act 2000, the expression ‘entitled’ was defined in s 3(1) as follows:

‘entitled’, in Chapter 3, means beneficially entitled;

Chapter 3 was headed ‘Certain transactions treated as transfers’.

[72][Apparently a reference to the decisions of the Court of Appeal in Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800 (Landrow) and Commissioner of State Revenue v Challenger Listed Investments Ltd (2011) 34 VR 617 (Challenger).]

[73]s 71.

[74]As noted above, the 1987 amendments that introduced subdivision (7) had provided in s 75N(3) for subdivision (7) to apply to a private unit trust scheme as if ‘a reference to a winding up of a corporation were a reference to a termination of a private unit trust scheme’.

In May 2004, the land rich provisions were replaced by a new regime enacted by the State Taxation Acts (Tax Reform) Act 2004 (Vic). In the second reading speech for the State Taxation Acts (Tax Reform) Bill 2004 (Vic), the (then) Treasurer, Mr Brumby, outlined the amendments to the Duties Act and stated, relevantly:[75]

Further, the rules for calculating the duty on high-value property transactions conducted through private companies and trusts are to be revised in light of current business practices, which have the effect of reducing taxation liabilities. The amendments to the land-rich tests will apply from this day.
The fundamental basis of stamp duty is that changes in beneficial ownership in land, however achieved, are subject to conveyance duty. For reasons of equity and revenue protection, it is essential that duties are applied equitably and effectively.
The amendments to the land-rich tests will ensure that an appropriate amount of tax is collected on all transactions in property involving land.
These changes comprise the best features of comparable provisions applying in other jurisdictions.

[75]Victoria, Parliamentary Debates, Legislative Assembly, 13 May 2004, 1314, 1316 (Mr John Brumby, Treasurer) (emphasis in bold italics added).

The Explanatory Memorandum for the State Taxation Acts (Tax Reform) Bill (Vic) stated, in respect of the amendments to the Duties Act, that:[76]

The Bill introduces anti-avoidance provisions intended to deter artificial and contrived schemes aimed at avoiding duty on a transfer or a dutiable transaction involving dutiable property to which Chapter 2 applies. They apply exclusively to Chapter 2. In addition the provisions will inhibit persons from preparing instruments where factors crucial to the assessment of duty are omitted or are misleading and to encourage persons seeking assessment of duty to lodge all necessary material pertinent to that transaction.
The Bill contains extensive amendments relating to the rules for calculating the duty on high value property transactions, conducted through private companies and trusts. These have been revised in light of widespread use of artificial structures to reduce taxation liabilities. The amendments to the land-rich tests will apply from 13 May 2004.

[76]Explanatory Memorandum, State Taxation Acts (Tax Reform) Bill 2004 (Vic), 1–2; Appendices to the Appellant’s Memorandum on the Landholder Provisions (20.12.2024), Appendix 11, 504–5.

Section 1 of the State Taxation Acts (Tax Reform) Act 2004 stated the purposes of that amending Act, relevantly as follows:

The purposes of this Act are—
(a) to amend the Duties Act 2000—
(i)… ;

(ii) to introduce general anti-avoidance provisions;
(iii)to reform the taxation of acquisitions of interests in land-rich entities;

(iv) … ;

In his memorandum the Commissioner observed that while extensive changes were made in 2004, few of them are relevant to the provisions in issue in this proceeding. For present purposes, one important change he identified was the introduction of the concept of a landholder which effectively replaced the notion of a private corporation and the need for private unit trusts to be deemed to be private corporations.

The companion concepts of a ‘landholder’ and a landholder that is ‘land rich’ were defined in s 71 respectively as follows:[77]
[77]State Taxation Acts (Tax Reform) Act 2004 s 71; Appendices to the Appellant’s Memorandum on the Landholder Provisions (20.12.2024), Appendix 10, 433–40.

71. Meaning of “landholder”
(1)For the purposes of this Part, a “landholder” is any of the following that has land holdings in Victoria—
(a)a private unit trust scheme;
(b)a wholesale unit trust scheme;
(c)a private company.

(2)A landholder is “land rich” if—
(a)it has land holdings in Victoria with an unencumbered value of $1 000 000 or more; and
(b)its land holdings in all places, whether within or outside Australia, comprise 60% or more of the unencumbered value of all its property.

Note: As to what constitutes a land holding, see section 72. As to ownership through linked entities or discretionary trusts, see sections 74 and 75.

In BPG Caulfield Village, Croft J conveniently summarised the operation of the new land rich provisions, as follows: [78]

(a) duty was chargeable on a ‘relevant acquisition’;
(b)a ‘relevant acquisition’ was the acquisition of a ‘significant interest’ in a ‘land rich’ landholder;
(c)a ‘significant interest’ in a landholder was an entitlement (otherwise than as a creditor or other person to whom the landholder was liable) to a distribution of 50% or more of the property from the landholder on its winding up, except in the case of a landholder that was a private unit trust scheme, in which case an entitlement of 20% or more of the property of the landholder on a winding up constituted a significant interest;
(d)‘landholder’ was defined to include private unit trust schemes and private companies; and
(e)a landholder was ‘land rich’ if it had land in Victoria with an unencumbered value of $1,000,000 or more and its land holdings in all places comprised 60% of the unencumbered value of all its property.

[78]BPG Caulfield Village (2016) 103 ATR 1, 10 [22] (citations omitted).

His Honour continued:[79]
[79]Ibid 10–11 [23].

Two cumulative criteria were, broadly, created by these provisions for the imposition of duty. First, the taxpayer had to acquire an interest of at least 50 per cent – or 20 per cent in the case of a private unit trust scheme – in another entity. Secondly, that other entity had to be a land rich entity. Moreover, the purpose of these land rich provisions was clear enough, as observed by the Court of Appeal in Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800; 2010 ATC 20-200:[80]
The explanatory memoranda and Second Reading Speeches accompanying each iteration of the legislation make it clear that the ‘mischief’ to which the land rich provisions are directed is the avoidance of duty on land transfers through the use of shares and units in private unit trusts.

Similarly, as the Minister observed in the Second Reading Speech introducing the [2012] Amendment Act:[81]
The current land-rich model was introduced in 1987 to deal with the avoidance of land transfer duty through the acquisition of shares in entities that owned land. At the time, these provisions were largely seen as anti-avoidance in nature.

[80]Ibid citing Landrow (2010) 79 ATR 800, 813 [48].

[81]Victoria, Parliamentary Debates, Legislative Assembly, 2 May 2012, 2023 (Mr Kim Wells, Treasurer); Duties Amendment (Landholder) Bill 2012.

Another important change that was made by the State Taxation Acts (Tax Reform) Act 2004 was an amendment to the definition of ‘unit in a unit trust scheme’ that appeared in the Duties Act 2000. As neither of the legislative history memoranda provided by the parties mentioned this change, which was made for the purposes of (inter alia) Part 2 of Chapter 3 (being then the land rich provisions), the relevant formulation is set out in the table below:

s 3(1) of the Duties Act 2000 (Vic)

Amendment by s 3(3) of the State Taxation Acts (Tax Reform) Act 2004 (Vic)

unit in a unit trust scheme means—

(a)   a right or interest (whether described as a unit or a sub-unit or otherwise) of a beneficiary under the scheme; or

(b)   a right to any such right or interest;

(3) In section 3(1) of the Duties Act 2000, in the definition of “unit”—

(a)   in paragraph (b), for “interest;” substitute “interest—”;

(b)   after paragraph (b) insert—

‘and, for the purposes of the definitions of “listed trust” and “widely held trust” and Part 2 of Chapter 3, means a unit (within the meaning of paragraph (a) or (b)) that entitles the beneficiary to participate proportionately with other unit holders in a distribution of the property of the trust on its vesting;’.

Accordingly, following the 2004 amendment, the definition of ‘unit in a unit trust scheme’ read as follows:

unit in a unit trust scheme means—
(a)a right or interest (whether described as a unit or a sub-unit or otherwise) of a beneficiary under the scheme; or
(b)a right to any such right or interest—

and, for the purposes of the definitions of listed trust and widely held trust and Part 2 of Chapter 3, means a unit (within the meaning of paragraph (a) or (b)) that entitles the beneficiary to participate proportionately with other unit holders in a distribution of the property of the trust on its vesting;

The Explanatory Memorandum for the State Taxation Acts (Tax Reform) Bill 2004 described the amendment as being ‘for the purposes of the land-rich provisions’, as follows:[82]
[82]Explanatory Memorandum, State Taxation Acts, 4, 6; (Tax Reform) Bill 2004; Appendices to the Appellant’s Memorandum on the Landholder Provisions (20.12.2024), Appendix 11, 504, 507, 509 (emphasis in bold italics added).

PART 2—DUTIES ACT 2000
Part 2 of the Bill contains those amendments to the Duties Act 2000.
Clause 3 amends current definitions and inserts new definitions in section 3 of the Duties Act. The definitions amended or inserted by this clause are mostly relevant for Part 2 of Chapter 3 (the ‘land-rich provisions’) as follows—
. . .
The definition of ‘unit’ is amended for the purposes of the land-rich provisions so that where it is referred to in those provisions it means a unit, the holder of which is entitled to the capital of the unit trust scheme (other types of units are disregarded, such as income units or those having other minor rights).

No amendment was made in 2004 to the definition of ‘unit trust scheme’ that appeared in the Duties Act 2000.

Other relevant amendments that were made in 2004 were noted in the Commissioner’s memorandum as being:[83]

Section 76 of the new provisions defined interests and significant interests. Three changes were made from the previous definition of interest. First, ‘private corporation’ was replaced by ‘landholder’. Secondly, an interest could be acquired ‘directly or through another person’. Thirdly, an interest required a ‘beneficial entitlement’ – this was already a requirement but was imported into the definition in s 76 rather than through the definition of ‘entitled’.
The maximisation of entitlements provision was the new s 86, which was not materially different from the previous provision in s 85.
Winding up was defined in s 76(3) and is in the same terms as the current s 79(3).

[83]Commissioner’s Memorandum in Response (11.04.2025), 9 [30]–[32].

In 2005 and 2007, minor amendments were made to the land rich provisions. The Commissioner summarised their effect as being as follows:[84]

(a)the Duties and Land Tax Acts (Amendment) Act 2005 (Vic) made several amendments. For present purposes, the only one of any relevance was the deletion of the words ‘or otherwise’ from the end of the definition of interest in s 76(1); and
(b)the main purpose of the amendments brought about by the State Taxation Acts Amendment Act 2007 (Vic) was to deal with the problem of acquisitions of interests made by trustees. As two decisions discussed below established,[[85]] the requirement of a ‘beneficial entitlement’ meant that a person who acquired an interest in a landholder in a purely trustee capacity had not made a relevant acquisition. The 2007 amendments therefore deleted ‘beneficial’ from the definition of interest in s 76(1) and inserted a new s 77(2AA) which provided that a person was taken to obtain an interest beneficially if the person obtained the interest as trustee of a trust.

[84]Ibid 9–10 [33].

[85][Apparently a reference to the decisions of the Court of Appeal in Landrow (2010) 79 ATR 800 and Challenger (2011) 34 VR 617.]

I note that in 2007, the s 3(1) definition of ‘entitled’ (that appeared in the Duties Act 2000) was repealed by the State Taxation Acts Amendment Act 2007 (Vic).[86]
[86]No. 33/2007, s 3.

In 2012 the land rich provisions were replaced by a landholder regime

In 2012, with the enactment of the Duties Amendment (Landholder) Act 2012 (Vic),[87] (the 2012 Amending Act), the land rich provisions in Parts 1 and 2 of Chapter 3 of the Duties Act were substituted by a new suite of provisions establishing the landholder regime.
[87]State Taxation Acts Amendment Act 2007 (Vic) No. 38 of 2012 (the 2012 Amending Act).

The Explanatory Memorandum to the Duties Amendment (Landholder) Bill 2012 (the 2012 EM[88] and the Landholder Bill[89] respectively) outlined the operation of cl 5 of the Landholder Bill, stating:[90]

[Clause 5] substitutes new Parts 1 and 2 into Chapter 3 of the Duties Act 2000.
The main function of this clause is to substitute the ‘land rich’ provisions in Chapter 3 of the Duties Act 2000, which impose duty on the acquisition of interests in certain land rich companies and unit trusts, with ‘landholder’ provisions which impose duty on certain acquisitions of interests in land holding private and listed companies and trusts, and wholesale unit trust schemes.

[88]Explanatory Memorandum, Duties Amendment (Landholder) Bill 2012 (the 2012 EM); Joint Book of Authorities, Doc 13, 404–44.

[89]Duties Amendment (Landholder) Bill 2012 (the Landholder Bill).

[90]2012 EM, 5; Joint Book of Authorities, Doc 13, 404, 408.

When introducing the 2012 Amending Act, the (then) Treasurer, Mr Wells, in his second reading speech, referred to the transition from the land rich provisions to the landholder regime and stated:[91]

However, they [the land rich provisions] have now evolved into a distinct head of duty, so that all acquisitions in land are subject to duty regardless of how the land is acquired.

[91]Victoria, Parliamentary Debates, Legislative Assembly, 2 May 2012, 2023 (Mr Kim Wells, Treasurer); Landholder Bill.

Section 1 of the 2012 Amending Act stated the purposes of the amending Act relevantly, as follows:

1 Purposes
The main purposes of this Act are—
(a) to amend the Duties Act 2000—
(i)to make further provision for the imposition of duty on the acquisition of interests in certain land holding entities; and
(ii)to make other miscellaneous and consequential amendments; …

The Commissioner observes that ‘although the landholder regime introduced certain entirely new concepts (such as the acquisition of an ‘economic entitlement’ in a landholder) they [the 2012 amendments] did not make any fundamental changes to the regime insofar as it applied to acquisitions of interests in landowning unit trusts’.[92]
[92]Commissioner’s Memorandum in Response (11.04.2025), 4 [12(e)].

For present purposes, I note that for the most part, save for some amendments to the definition of ‘associated person’ and ‘related person’, the definitions of relevant terms in s 3(1) of earlier iterations of the Duties Act that are referred to above remained unchanged.

Following the enactment of the 2012 Amending Act, Chapter 3 of the Duties Act continued to be headed ‘Certain Transactions treated as Transfers’. Part 1, which is headed ‘Introduction and Overview’, introduces and provides an overview of the landholder provisions as follows:

70 Imposition of duty
This Chapter charges duty at the same rate as for a transfer of dutiable property under Chapter 2 on certain acquisitions of interests in landholders.
Note
Duty is chargeable under Part 2 on the acquisition by a person of certain interests in private landholders and public landholders that have land holdings in Victoria with an unencumbered value of $1 million or more.
The duty is chargeable at the general rate for a dutiable transaction under Chapter 2.
Duty was chargeable under Parts 3 and 4 on certain transactions occurring before 1 July 2002.
Duty is charged under Part 5 on the allotment of units or shares that confer a land use entitlement.

By the 2012 Amending Act, Part 2 of Chapter 3 was substituted with a new Part 2 which contains the landholder provisions. That is to say, the suite of provisions in Part 2 that are referred to below are ‘new’ provisions in the sense that they were introduced by the 2012 Amending Act in substitution for the version of the respective provision that appeared in the earlier version of the Duties Act.

Part 2 of Chapter 3 is headed ‘Acquisition of Interests in Certain Landholders’. Division 1 deals with ‘Landholders’ and Division 2 deals with ‘Charging of duty’.

Division 1 — ‘Landholders’

According to the 2012 EM:[93]

Division 1—Landholders—explains the type of landholding structure targeted by the landholder provisions and how to determine if a company or unit trust owns or is entitled to the requisite $1 million land holdings in Victoria.

[93]2012 EM, 6; Joint Book of Authorities, Doc 13, 404, 409.

Section 71 addresses the meaning of ‘landholder’ for the purposes of Part 2 of Chapter 3 and provides:

71       Meaning of landholder
(1)For the purposes of this Part, a landholder is any of the following that has land holdings in Victoria with a total unencumbered value of $1 000 000 or more—
(a)       a private unit trust scheme;
(b)       a private company;
(c)       a wholesale unit trust scheme;
(d)      a listed company;
(e)       a public unit trust scheme.

(2) For the purposes of this Part, a landholder may hold land—
(a) in accordance with section 72;
(b)under an uncompleted agreement in accordance with section 74;

(c) through a linked entity in accordance with section 75;
(d) through a discretionary trust in accordance with section 76.
(3)A private landholder is a landholder that is a private unit trust scheme, private company or wholesale unit trust scheme.
(4)A public landholder is a landholder that is a listed company or a public unit trust scheme.

The expressions ‘private unit trust scheme’ and ‘unit trust scheme’ are defined in s 3 respectively as follows:

private unit trust scheme means a unit trust scheme that is not—
(a) a public unit trust scheme; or
(b) a wholesale unit trust scheme;

…
unit trust scheme means any arrangements made for the purpose, or having the effect, of providing, for persons having funds available for investment, facilities for the participation by them, as beneficiaries under a trust, in any profits, income or distribution of assets arising from the acquisition, holding, management or disposal of any property whatever pursuant to the trust;

Section 72 deals with what are ‘land holdings’. Relevantly, s 72 (as it appears in authorised version No. 90) provides as follows:

72 What are land holdings?
(1)For the purposes of this Part, a land holding is an interest in land other than the estate or interest of a mortgagee, chargee or other secured creditor or a profit à prendre.
(2)An interest in land, however—
(a)is not a land holding of a unit trust scheme unless the interest is held by—
(i)a trustee of the scheme in the capacity of trustee; or
(ii)a custodian or other agent in the capacity as custodian or agent of the trustee of the scheme; and

(b)is not a land holding of a company unless the interest of the company in the land is a beneficial interest.

(3)This section is in aid of, but does not limit, the operation of any provision of this Part providing for constructive ownership of interests in land.

Section 73, which is not relevant for present purposes, deals with the issue of what the ‘land’ includes for the purposes of Part 2.

The effect of ‘uncompleted agreements’ is addressed in s 74. Relevantly, s 74(1) provides as follows:

74 Effect of uncompleted agreements
(1)For the purposes of this Part, the vendor and purchaser under an uncompleted agreement for the sale of land are taken to be separately entitled to the whole of the land.

[299](The reference in the definition above to ‘Part 2 of Chapter 3’ is a reference to the landholder provisions — headed ‘Acquisition of Interests in Certain Landholders’.)

It will be recalled from the legislative history timeline above, that when the definition of ‘unit’ was amended in 2004, by s 3(3) of the State Taxation (Tax Reform) Act 2004 (Vic), the Explanatory Memorandum stated:[300]

…
The definition of ‘unit’ is amended for the purposes of the land-rich provisions so that where it is referred to in those provisions it means a unit, the holder of which is entitled to the capital of the unit trust scheme (other types of units are disregarded, such as income units or those having other minor rights).

[300]Explanatory Memorandum, State Taxation Acts (Tax Reform) Bill 2004 (Vic); Appendices to the Appellant’s Memorandum on the Landholder Provisions (20.12.2024), Appendix 11, 504, 507, 509 (emphasis in bold italics added).

Thus, when the definition of ‘unit’ is read with the statement in the Explanatory Memorandum, it is clear that when dealing with the landholder provisions in Part 2 of Chapter 3, the focus of the enquiry as to whether the holder of a unit in a unit trust scheme has an ‘interest’ in a landholder is on whether the units so held are units which confer on the holder ‘a right or interest … to participate proportionately with other unit holders in a distribution of the property of the trust on its vesting’. In other words, one asks whether the units held are units ‘the holder of which is entitled to the capital of the unit trust scheme.’

The relevant concept of ‘winding up’

It is also clear, and common ground between the parties, that the ‘winding up of the landholder’ referenced in s 79 is not an actual winding up of the kind performed by a liquidator in an insolvency case. Rather, this winding up, as prescribed by the statute, looks to what would happen on ‘the vesting of the trust property in the beneficiaries’ — here, the vesting of the trust property of the Victory Hybrid Unit Trust in the beneficiaries — and to whether, in that event, any of the Transferees ‘has an entitlement … to a distribution of property from the landholder’ and thus has an ‘interest’ in a landholder.

In Snowy Hydro Ltd v Commissioner of State Revenue,[301] (Snowy Hydro), a case concerning the earlier land rich provisions, Davies J had to consider the meaning of the expression ‘winding up’ in the ‘linked entity’ provisions, where s 74(7) provided as follows:

(7) In this section—
. . .
winding up of a linked entity includes any means by which the entity’s property is divested in favour of the persons entitled to it and, in the case of a linked entity that is a trust, includes the vesting of the trust property in the beneficiaries.[302]

[301](2010) 79 ATR 118; Appendices to the Appellant’s Memorandum on the Landholder Provisions (20.12.2024), Appendix 14, 602–20.

[302]Emphasis (in bold) added.

In Snowy Hydro, the taxpayer contended that the unincorporated joint venture arrangement was not a ‘linked entity’ under s 74, but the Commissioner disagreed. Her Honour held that s 74 does not apply in the way contended for by the Commissioner. When considering the definition in the linked entity provisions Davies J said:[303]

Whether the joint venture arrangement should be treated as terminated for the purposes of determining the interest in the freehold land and other property that LVBV ‘would receive’ on the ‘winding up’ of the joint venture depends on the meaning of the expression ‘winding up’ as used in s 74(4). ‘Winding up’ for this purpose is a statutory fiction. The section is not about the consequences of actual winding up. It is a ‘look through’ provision to identify and bring within the scope of s 71(2) in relation to a landholder, property that is held by another entity. The function of s 74 is simply to prescribe the relevant link for the purposes of attribution of another’s property to the landholder. The section requires an hypothesis about whether the landholder would be entitled to receive property of that other entity, if that entity was wound up. The stipulation is about entitlement to property, not about the consequences of winding up. Nothing turns on how the entitlement would arise as ‘winding up’ includes ‘any means by which the entity’s property is divested in favour of the person’s entitled to it’. The relevant link between the landholder and the linked entity, for the purposes of s 74, is the landholder’s entitlement to property of the linked entity.

[303](2010) 79 ATR 118, 129–30 [47] (emphasis in bold italics added).

On the Commissioner’s appeal in Snowy Hydro, the Court of Appeal referred to Davies J’s use of an ‘hypothesis’ directed to establishing any entitlement to property, and agreed with her Honour’s analysis, as follows:[304]
[304](2012) 43 VR 109, 113 [10]–[12] (emphasis in bold italics added) (Maxwell P, Redlich JA and Robson AJA).

The notional ‘winding up’ under s 74
At trial, the Commissioner submitted that, for the purposes of identifying the assets of VP to which LVBV would be entitled if VP were wound up, the joint venture must be treated as if it had been terminated. This was said to be so because, if VP went into liquidation, the joint venture must inevitably (have) come to an end. Hence, even if (contrary to the Commissioner’s submissions) the effect of the JVA was to give CP an equitable interest in the land, that interest must be disregarded for the purposes of the ‘land rich’ computation. Upon termination of the joint venture, VP would hold the freehold title free of any such interest.
Her Honour rejected the Commissioner’s submission, pointing out that s 74(4) of the Act is not concerned with the practicalities of an actual winding-up of the ‘linked entity’. Rather, the focus is on the entitlement of the relevant entity to the assets of the linked entity. As her Honour said:
‘“Winding-up” for this purpose is a statutory fiction. The section is not about the consequences of actual winding-up. It is a “look through” provision to identify and bring within the scope of s 71(2) … property that is held by another entity. The function of s 74 is simply to prescribe the relevant link for the purposes of attribution of another’s property to the landholder. The section requires an hypothesis about whether the landholder would be entitled to receive property of that other entity if that entity was wound up. The stipulation is about entitlement to property, not about the consequences of winding-up.’[305]

We respectfully agree with her Honour’s analysis. . . .

[305]Ibid citing Snowy Hydro Limited (ACN 090 574 431) v Commissioner of State Revenue (Vic) (2010) 79 ATR 118, 129–30 [47] (‘Reasons’).

As will be noted, the definition in s 74(7) under consideration in Snowy Hydro was an inclusive one, whereas the definition in s 79(3) under consideration in the present case is exhaustive. However, notwithstanding that difference, her Honour’s analysis of the similar statutory concept, as it applied under the earlier land rich provisions, is instructive and helpful for present purposes.

The relevant concept of ‘entitlement’

As noted earlier, the concept of ‘entitlement’ as used in s 79(1) is not defined in the Duties Act. Generally speaking, an ‘entitlement’ according to ordinary concepts means ‘a legal right or just claim to do, receive, or possess something’.[306]
[306]Oxford English Dictionary (online at 4 August 2025) ‘entitlement’ (v¹, def 1a).

The companion expression ‘economic entitlement’, which applies to the second class of ‘relevant acquisition’ set out in Division 2, being the acquisition of an economic entitlement, is effectively defined in sub-s 81(2) and (3), as follows (emphasis in bold italics added):

81 Acquisition of economic entitlement
(1)Despite anything to the contrary in this Part, this section applies if a person acquires, either alone or together with an associated person, directly or indirectly, an economic entitlement, other than by a relevant acquisition dutiable under this Part.
(2)For the purposes of this section, a person acquires an economic entitlement if the person acquires shares or units in a private landholder or enters an arrangement in relation to a private landholder under which the person is entitled to all or any of the following—
(a)to participate in the dividends or income of the private landholder;
(b)to participate in the income, rents or profits derived from the land holdings of the private landholder;
(c)to participate in the capital growth of the land holdings of the private landholder;
(d)to participate in the proceeds of sale of the land holdings of the private landholder;
(e)to receive any amount determined by reference to paragraph (a), (b), (c) or (d);
(f)to acquire any entitlement described in paragraph (a), (b), (c), (d) or (e).

(3)The interest acquired under an economic entitlement is the proportion of the economic benefit referred to in subsection (2)(a), (b), (c), (d), (e) or (f) that the person is entitled to receive or acquire under the economic entitlement.
. . .

It follows from the fact of there being separate concepts or species of entitlement (one being an ‘entitlement’ and the other being an ‘economic entitlement’) for the purposes of the landholder provisions, that an ‘entitlement’ for the purposes of s 79(1) is distinct from what is an ‘economic entitlement’ for the purposes of s 81.

The starting point for duty to be exigible as a result of a relevant acquisition, is that a person has an ‘interest’, and thereby an ‘entitlement’, under s 79(1) ‘to a distribution of property from the landholder on a winding up of the landholder’ — meaning ‘the vesting of the trust property in the beneficiaries’ (s 79(3)). That is to say, such an ‘entitlement’ for the purposes of s 79(1) is to be understood by reference to the statutory notion of a ‘winding up’ under s 79(3), which is a statutory vesting, that looks to what happens upon the cessation of operation of the private landholder and the attendant rights of beneficiaries to take a portion of the property or assets available for distribution. Under s 79(1), the ‘interest’ concept focuses on the entitlement of the person to take a portion of the property or assets available for distribution. It is not concerned with, and is separate and distinct from, the concepts embodied in an ‘economic entitlement’ such as a right to ‘participate’ and receive monetary sums generated over time by the private landholder or from the land holdings of the private landholder.

In terms of ‘interest’, as noted above, the relevant concept of ‘interest’ for duty purposes is that of a ‘significant interest’, which is referred to in s 79(2).[307] Importantly, however, one only reaches s 79(2) if it is first demonstrated that, by virtue of sub-s (1), a person has an interest in a landholder.
[307]As mentioned earlier, it is only where a person has acquired a ‘significant interest’ in the landholder, being relevantly an entitlement to 20% or more of the property distributed, that a liability to duty arises.

Section 79(2) introduces a temporal component for the ascertainment of the person’s ‘entitlement’ for duty purposes, and focusses on the entitlement of the person (or what the person ‘would be entitled to’) ‘immediately after the interest was acquired’, as follows:

(2)A person who, by virtue of 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)in the case of a landholder that is a private unit trust scheme—20% or more of the property distributed; or

. . .

That is to say, in the present case, a person who has an interest in a landholder by virtue of s 79(1) will be taken to have a ‘significant interest’ in the landholder that is a private unit trust scheme under s 79(2)(a) if, on a distribution of all the property of the Victory Hybrid Unit Trust immediately after the interest was acquired (here, relevantly, by means of the 10 October 2012 Transactions) that person would be entitled to 20% or more of the property distributed on a winding up of the landholder. The language used in s 79(2), viz, ‘if the person, in the event of… would be entitled to…’ serves to confirm that the ‘winding up of the landholder’ envisaged under s 79 is not referring to an actual winding up, but rather to an hypothetical or notional winding up created by the statutory regime.

The ‘Note’ which appears after s 79(3) is to be read and understood in that context. The ‘Note’ states:

Note
Section 89H is relevant to ascertaining a person’s entitlements on a distribution of property.

While the Note draws attention to the relevance of s 89H when considering what are a person’s entitlements on a distribution of property, it does not explain precisely how it applies. When one has regard to the enquiry to be made first, under s 79(1), as to whether a person has an interest, and secondly, under s 79(2), if the person does have an interest by virtue of s 79(1), whether that interest is a significant interest because the person is relevantly entitled to 20% or more of the property distributed, it seems unlikely that the procedure under s 89H would be required to be applied successively under each of s 79(1) and s 79(2).

As will be noted, the enquiry under s 79(1) does not involve any calculation, as there is no numerical threshold to be met. What is required under s 79(1) is to establish that the person has ‘an entitlement … whether directly or through another person, to a distribution of property from the landholder on a winding up of the landholder.’ Whereas, once it is established that the person has an interest in a landholder by virtue of s 79(1), the enquiry is as to whether that interest is a ‘significant interest’. In the case of a private unit trust scheme, the enquiry under s 79(2) is directed to whether, on a distribution of all of the property of the landholder immediately after the interest was acquired, the person would be entitled to 20% or more of the property distributed. That enquiry does require a calculation or ‘ascertainment’ of the person’s entitlement, whether directly or through another person, and if it does pass the 20% threshold and qualify as a ‘significant interest’, then it will be a relevant acquisition under s 78(1)(a) that gives rise to a liability for duty under s 77.

In my view, when the ‘Note’ is read and construed in the context of s 79, it seems likely that it is the extent of the person’s ‘significant interest’ under s 79(2) (what the person ‘would be entitled to’ on a distribution of property) that is to be ascertained, and maximised for duty purposes, through the s 89H route, rather than the ascertainment of the interest under s 79(1).

Here, it will be recalled the appellant’s case is that none of the Transferee unit holders acquired an ‘interest’ when they acquired their units in the Victory Hybrid Unit Trust. The appellant accepts that the Victory Hybrid Unit Trust is a ‘private unit trust scheme’ and that the private unit trust is a ‘landholder’ but what the appellant denies is that there has been any acquisition of any ‘interest’ in that private unit trust scheme under s79(1).[308] In its outline of submissions, the appellant stated:[309]

In this case, the Appellant accepts that the Victory Hybrid Trust is a ‘private unit trust scheme’, as defined – but the Appellant is maintaining that it is not a ‘unit trust scheme’ in which the unit holders acquired, or could have acquired, an ‘interest’ as per s 79(1) of the Act, or a ‘significant interest’ as per s 79(2) of the Act. It is for this reason that no liability can arise under the landholder provisions.

[308]Transcript 26.11.2024, 25–6 (Mr Grace).

[309]Appellant’s Outline of Submissions (19.06.2024), 14 [48] at fn.28.

In my view, the appellant’s argument runs contrary to the scheme of the legislation and the statutory concepts it embodies. The companion statutory concepts of a ‘unit’ and a ‘unit trust scheme’ are central to understanding the hypothetical or notional winding up that is required by the statutory regime as a precursor to the establishment of a ‘significant interest’ — what the person ‘would be entitled to’ — that constitutes a ‘relevant acquisition’ from which a liability for landholder duty arises.

The expression ‘unit trust scheme’ is defined in s 3(1) of the Duties Act to mean

any arrangements made for the purpose, or having the effect, of providing, for persons having funds available for investment, facilities for the participation by them, as beneficiaries under a trust, in any profits, income or distribution of assets arising from the acquisition, holding, management or disposal of any property whatever pursuant to the trust;

The definition makes clear that a ‘unit trust scheme’ encompasses ‘any arrangements’ made for the purpose or effect of providing facilities for investors to participate as beneficiaries under a trust. It does not foreclose or prohibit arrangements which include discretionary features, such as those found in hybrid trust arrangements.

The companion expression ‘private unit trust scheme’ is defined in s 3(1) of the Duties Act to mean (emphasis in bold and underlined added)

a unit trust scheme that is not—
(a) a public unit trust scheme; or
(b) a wholesale unit trust scheme.

It follows from the express words of the definition that a private unit trust scheme is a species of ‘unit trust scheme’.

In the present case, the three ‘participants’ to the agreement recorded in the MPC, Kathryn Yang, Ningjun Liu and Jiefu Zheng, agreed to jointly finance the acquisition of the Land for a sum of approximately $10 million and to pay the capital of $10 million two months prior to settlement, following which their respective shareholding in Victory would be changed to the following proportions:

a)        Kathryn Yang or a nominated company — 37%;
b)        Jiefu Zheng or a nominated company — 26%; and
c)        Ningjun Liu or a nominated company — 37%.

As matters transpired, to facilitate the purchase of the Land, they interposed and adopted a unit trust structure (the Victory Hybrid Unit Trust) in addition to the (Victory) corporate structure outlined in the MPC, and Victory was appointed as trustee of the Victory Hybrid Unit Trust.

The Victory Hybrid Unit Trust meets the description of, and is, a ‘unit trust scheme’ for the purposes of the Duties Act. But if there were any doubt about that, the appellant’s acceptance that the Victory Hybrid Unit Trust is a ‘private unit trust scheme’, which is a defined term for the purposes of the Duties Act, constitutes an acknowledgement that the Victory Hybrid Unit Trust falls within the description of the species of ‘unit trust scheme’ as defined in the Duties Act, and implicitly that it is also a ‘unit trust scheme’ for the purposes of the Duties Act.

Further, in my view, when the definition of ‘unit in a unit trust scheme’ is read and construed along with the definition of ‘unit trust scheme’, it informs an understanding of what is meant by the statutory winding up effected under s 79 and the relevant concept of ‘entitlement’, for the purposes of the landholder provisions concerning ‘Acquisition of Interests in Certain Landholders’. Those provisions assist to clarify that, in circumstances where one is considering whether a person who is a beneficiary under a unit trust scheme and is the holder of a unit in a unit trust scheme has an ‘interest’ by virtue of s 79(1), the focus of the enquiry as to ‘entitlement’ under s 79(1), on a statutory winding up of the landholder, is on whether the units that the unit holder holds are units that entitle it ‘to participate proportionately with other unit holders in a distribution of the property of the trust on its vesting’. The statement in the Explanatory Memorandum for the State Taxation Acts (Tax Reform) Bill (extracted above) serves to confirm that.

In the present case, because s 79(2) directs that the enquiry as to whether the interest held by the unit holder is a ‘significant interest’ is to be determined ‘in the event of a distribution of all the property of the landholder immediately after the interest was acquired’, it is clear that the posited distribution of property must take place immediately following the 10 October 2012 Transactions. At that point, no directions have been given by the ‘Voting Unit Holders’ under cl 17.8 of the Victory Deed and the trustee has not exercised any relevant discretions. As the Commissioner submits, in that scenario ‘one asks: what would happen if the trust were wound up immediately without any further action on the part of the trustee?’[310] Clause 17.1 of the Victory Deed provides the answer, namely that ‘the Trustee shall hold the Trust Fund for the holders of the Capital Units’.
[310]Commissioner’s Outline of Submissions (22.07.2024), 12 [34].

Accordingly, as each of the Transferees is the holder of C Class Units, which are the ‘Capital Units’ that effectively entitle the holder to participate proportionately with other holders of C Class Units (in direct proportion to the number of C Class Units held) in a distribution of the property of the Victory Hybrid Unit Trust on its vesting, each of them has the requisite ‘entitlement’ to a distribution of property from the landholder on a (statutory) winding up of the landholder, and thus has an ‘interest’ in the landholder by virtue of s 79(1).

Do each of the Transferees have a ‘significant interest’ in a landholder?

As each of the Transferees has an interest in a landholder by virtue of sub-s (1), the next step is to ask whether, as required by sub-s (2), each of them has a ‘significant interest’ in a landholder immediately after the interest was acquired. Relevantly, in the case of a private unit trust scheme under s 79(2)(a), one asks whether in the event of such a distribution of all of the property of the landholder each of them ‘would be entitled to’ 20% or more of the property distributed. At this point, because a ‘calculation’ of the entitlement of a person is effectively required to be undertaken, s 89H is enlivened.

The role and operation of s 89H

Section 89H is headed ‘Maximisation of entitlements on distribution of land holdings’. Subsection (1) provides:

(1)This section applies to any calculation, for the purposes of this Part, of the entitlement of a person (the interested person) to participate in a distribution of the property of a landholder, whether on a winding up, a vesting of trust property or otherwise.

As will be noted, the procedure set out in s 89H for calculating the entitlement of an ‘interested person’ to participate in a distribution of the property of a landholder is not limited to a winding up (as defined in s 79(3)) but applies also to a vesting of trust property or a distribution conducted by other means (‘or otherwise’).

For present purposes, as each of the Transferees has an interest in a landholder by virtue of s 79(1), the procedure under s 89H is relevant to the calculation of the entitlement of each Transferee for the purposes of s 79(2) — i.e., whether it would be entitled to ‘20% or more of the property distributed’ — and thus is a ‘significant interest’ which is the ‘relevant acquisition’ for duty purposes. That is to say, if the interest held by a person (here, the Transferee) is of itself a significant interest in the landholder,[311] or amounts to a significant interest in the landholder when aggregated with other interests in the landholder acquired by one or more associated persons, or any other person in an ‘associated transaction’,[312] then the interested person (here, the Transferee) has made a ‘relevant acquisition’ under s 78(1)(a). A liability for duty arises under s 77 ‘when a relevant acquisition is made’.
[311]Duties Act s 78(1)(a)(i).
[312]Ibid s 78(1)(a)(ii), note also sub-ss 78(2) and (3). An ‘associated transaction’ is defined in s 3(1).

As was explained in the 2012 EM,[313] s 89H addresses circumstances where a person who has an interest in a landholder possesses rights that if utilised may increase the person’s entitlement to distribution on a winding up. If, for e.g., a unit holder has a power to change the voting rights (and thereby enhance that person’s entitlement) then for the purposes of determining the unit holder’s entitlement in a landholder for Part 2 of Chapter 3, s 89H enables the maximum entitlement capable of being acquired to be utilised.
[313]See Joint Book of Authorities, Doc 13 404, 428.

The procedure for determining the extent of the interest a person has in the winding up of a landholder is set out in sub-ss (2)–(4). The procedure requires first, a calculation to be made under sub-s (2), based on the rules of the landholder which apply to the interest held, and then the entitlement of the interested person is to be evaluated accordingly. Subsection (2) provides:[314]

(2)A calculation is to be made based, firstly, on a distribution carried out in accordance with the constitution of the landholder, and with any law relevant to the distribution, as in force at the time of distribution, and the entitlement of the interested person is to be evaluated accordingly.

[314]Emphasis in underlining added.

Subsection (5) explains what the reference to ‘the constitution of the landholder’ means:

(5)A reference in this section to the constitution of a landholder is a reference, if the landholder is a unit trust scheme, to the trust deed or other document that contains the rules of the trust.

Then, another calculation is to be made under sub-s (3), after all rights available have been exercised to maximise the entitlement of the interested person to a distribution of property from the landholder on a winding up, and the entitlement of the interested person is to be evaluated accordingly. Subsection (3) provides for the maximisation of entitlement calculation and evaluation to take place as follows:

(3)Next, a calculation is to be made based on a distribution carried out after the interested person, and any other person whom the interested person has power to direct with respect to such a distribution or who is, in relation to the interested person, an associated person, has exercised all powers and discretions exercisable by them—
(a)to effect or compel an alteration to the constitution of the landholder; and
(b)to vary the rights conferred by units or shares in the landholder; and
(c)to effect or compel the substitution or replacement of units or shares in the landholder with other units or shares in it—

in such a manner as would maximise the value of the entitlement, and the entitlement of the interested person is to be evaluated accordingly.

The expression ‘associated person’ is defined in s 3(1) in very broad terms, and means ‘a person who is associated with another person in accordance with’ any of the several ways set out in paragraphs (a)–(k) of the definition ‘and, for the purposes of Part 2 of Chapter 3, a public company and a subsidiary of a public company are taken to be associated persons’. Relevantly, for present purposes, based on an application of the permutations set out in the definition, it seems clear that each of the Transferees is an associated person of the trustee company, Victory, and is an associated person of each of the other Transferees.

The Commissioner points to the wide power of amendment in cl 10 of the Victory Deed — which permits the Trustee with the consent of the Unit Holders, to vary any of the trusts, terms or conditions of the trust — and observes:[315]

Although there are some conditions on the exercise of this power, they would not prevent an amendment to the Deed to provide that the Trust Fund is held for the Unit Holders to the exclusion of all others. An amendment could even provide for one of the Unit Holders to be entitled to all of the Trust Fund.

[315]Commissioner’s Outline of Submissions (22.07.2024), 14 [43].

The appellant responded by contending that the exercise of power contemplated by the Commissioner’s example of the application of s 89H(3) ‘would be a dramatic rewriting of cl 17’. However, when one looks at the steps prescribed by s 89H(3)(a) and (b) and (c), it is clear that the entitlement calculation to be undertaken thereunder is one that does involve the relevant persons (being the interested person and any associated person(s)) exercising all of their powers and discretions to effect an alteration to the constitution and to vary the rights conferred by the units in the trust and to effect or compel the substitution of units in the trust with other units in the trust, ‘in such a manner as would maximise the value of the entitlement’ of the interested person. That extensive process, which the appellant acknowledges is ‘directed to “maximising” specific, unexercised winding-up rights that have been conferred on a …unitholder, or associated person’, is reflective of the fact that s 89H is ‘anti-avoidance in nature’.[316]
[316]Appellant’s Memorandum on the Landholder Provisions (20.12.2024), 6–7 [12].

Once those calculations and evaluations under each of sub-ss (2) and (3) have been performed, sub-s (4) requires that the results be compared, and provides that whichever entitlement is the greater is ‘the correct evaluation’ and the one that is used for the purposes of Part 2 of Chapter 3, unless the Commissioner determines otherwise. Subsection (4) provides:[317]

(4)The results obtained by an evaluation of the interested person’s entitlement in accordance with subsections (2) and (3) are then to be compared, and whichever evaluation results in a greater entitlement is the correct evaluation, for the purposes of this Part, of the entitlement, unless the Commissioner, being satisfied that the application of this subsection in the particular case would be inequitable, determines otherwise.

[317]Emphasis in bold italics added.

Here, when making the Assessment, the Commissioner contended that the calculation and evaluation to be made under sub-s (2), based on the Trust Deed, produces an entitlement of the respective Transferees as being:

(a) JY Property Pty Ltd as trustee for the JYPI Trust — 37%;

(b) LBZ Pty Ltd as trustee for the LBZ Investment Trust — 37%, and

(c) ZJF Investments Pty Ltd as trustee for the ZJF Investments Trust — 26%.

Accordingly, he said that as each of the Transferees has acquired more than 20% of the units in the Victory Hybrid Unit Trust, and if what they acquired constituted an ‘interest’ under s 79(1), then it was also a ‘significant interest’ under s 79(2).

However, on the appeal, the Commissioner contends that when the calculation and evaluation to be made under sub-s (3) is performed, based on the Victory Deed but after all rights available have been exercised to maximise the entitlement of the interested person to a distribution of property from the landholder on a winding up, the entitlement arrived at for each of the respective Transferees is 100%, totalling 300% for all. But, the Commissioner now says[318] that as this would be ‘an inequitable outcome’ for the appellant, he would ‘determine otherwise’ under s 89H(4) and charge duty on the appellant under s 85(1)(b) on the basis of the acquisition of a 100% interest only. Further, he says, notwithstanding some evident inaccuracies in the Assessment, the Assessment charged the correct amount of duty (and amounts of penalty tax and interest).
[318]Respondent’s Aide-mémoire — Duties Act Section 89H(3) (20.12.2024), [8].

I agree with the Commissioner’s approach on the appeal as outlined above concerning the calculation and evaluation procedure to be performed under sub-ss (2) and (3) of s 89H. And if, as the Commissioner says, he is now of the view that the ‘correct evaluation’ produced by the comparison of the evaluation results under sub-s (4) would be an ‘inequitable’ outcome in this particular case, it is open to him to ‘determine otherwise’ under s 89H(4) and charge duty on the appellant under s 85(1)(b) on the basis of the acquisition of a 100% interest only. However, this ‘re-vamped’ approach does not accord with the Assessment he made on 30 September 2020.

The Commissioner acknowledges that the Assessment is ‘inaccurate’ but says it nevertheless charged the correct amounts of duty, penalty and interest and any error in the Assessment is immaterial

The Commissioner acknowledges that the Assessment is inaccurate in the following ways:[319]

(a)it describes the interests acquired by each Acquirer as being less than 100%, and the aggregate of interests being 100% rather than 300%; and
(b)it does not record that the Commissioner ‘determined otherwise’ under s 89H(4) and he accepts that in terms he did not do so.

[319]Ibid [9].

But, he submits, ‘[n]otwithstanding these inaccuracies, the Assessment charged the correct amounts of duty, penalty tax and interest on the Appellant’ and in those circumstances, ‘it would not be appropriate to remit the Assessment to the Commissioner’ as ‘[a]ny error in the Assessment is immaterial’.[320]
[320]Ibid [10].

I do not share the Commissioner’s view regarding the correctness of the Assessment, nor do I agree that any error in the Assessment is immaterial. Section 77 makes clear that a liability for duty charged by Part 2 of Chapter 3 ‘arises when a relevant acquisition is made’ and s 78 sets out what is a relevant acquisition. In circumstances where the Commissioner has moved ground and re-stated his position as to the basis on which he contends the appellant is liable for duty under the landholder provisions, the ‘relevant acquisition(s)’ now relied upon by the Commissioner do not accord with those ‘Relevant Acquisitions’ stated in the Assessment.

In his aide-mémoire on s 89H(3), which was prepared at the request of the Court and filed on 20 December 2024, the Commissioner posits two scenarios, each of which proceeds from the same starting point, namely that ‘for each Acquirer, the amount evaluated by s 89H(3) is 100%’.[321] Under the first scenario (outlined in [6] and [7] of the aide-mémoire) the Commissioner says that in those circumstances, he could have:[322]

(a)assessed each Acquirer on the basis that it had acquired a 100% interest; or
(b)if he had been satisfied that the application of s 89H(4) would be inequitable in this particular case, determined that the interest of one of more of the Acquirers should be some amount other than 100%.

[321]Ibid [6].

[322]Ibid [7] (emphasis in bold italics added).

The second scenario (outlined in [8] and [9] of the aide-mémoire) contemplates a ‘separate’ assessment of Victory as trustee, under s 85(1)(b), as follows:[323]

The Commissioner could also have – separately from assessing the Acquirers — assessed the Appellant as trustee of the landholder, relying on s 85(1)(b). Since each Acquirer acquired a 100% interest, the Appellant was prima facie liable to pay duty on the equivalent of an acquisition of a 300% interest. This would be an inequitable outcome for the Appellant and so the Commissioner would ‘determine otherwise’ under s 89H(4) and charge duty on the Appellant on the basis of the acquisition of a 100% interest only.
This is what the Commissioner in effect did. …

[323]Ibid [8]–[9] (emphasis in bold italics added).

Neither of those scenarios accords with or reflects the ‘Relevant Acquisition(s)’ stated in the Assessment.[324]
[324]In the Assessment, the ‘relevant acquisition(s)’ were described as follows:

Further, the Commissioner has acknowledged that the Assessment was ‘inaccurate’ inter alia because ‘it does not record that the Commissioner “determined otherwise” under s 89H(4)’. This acknowledgement suggests that the Commissioner is of the view that such a determination, if made, should be recorded in the assessment. Accordingly, if the Commissioner is satisfied that the application of s 89H(3), in the second scenario that he now relies on, would be inequitable or would produce an inequitable outcome in that particular case, such that the Commissioner would ‘determine otherwise’ under s 89H(4) and charge duty to the appellant on the basis of a relevant acquisition of a 100% interest only, then that determination should be recorded in the Assessment.

In my view, in the circumstances, it is appropriate for the Court to remit the Assessment to the Commissioner. If the Commissioner is seeking to recover duty in the same amount but on the basis contended for on the appeal — reflecting ‘what the Commissioner in effect did’ — then the relevant acquisitions relied on must be specified and any exercise of the Commissioner’s discretion to ‘determine otherwise’ under s 89H(4) should be recorded.

Conclusion

For the reasons set out above, the appellant’s appeal will be dismissed. However, as the Commissioner has, during the appeal, with leave, moved ground and re-stated his case, and is now relying upon grounds other than those on which the Objection was disallowed, such that the Assessment made on 30 September 2020 is inaccurate, and does not accord with the ‘relevant acquisition(s)’ now relied on, it is appropriate for the Court to remit the Assessment to the Commissioner.

In due course, I will hear from the parties as to the appropriate form of orders, including as to whether a formal order is required for a grant of leave under s 109 of the TAA and as to costs.

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APPENDIX

Figure 1: Structure of the Victory Hybrid Unit Trust immediately before 10 October 2012

Figure 2: Structure of the Victory Hybrid Unit Trust immediately after 10 October 2012

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Referencing Authorised Version No. 131 (incorporating amendments as at 6 September 2023). Section 36, which is headed ‘Headings, Schedules, marginal notes and footnotes’, provides in

sub-s (3A)(b) as follows (emphasis in bold italics added):
(3A)An example (being an example at the foot of a provision under the heading “Example” or “Examples”), diagram or note (being a note at the foot of a provision and not a marginal note, footnote or endnote) in an Act or subordinate instrument forms part of the Act or subordinate instrument if—
(a)the Act is passed, or the subordinate instrument is made, on or after 1 January 2001; or
(b)the example, diagram or note is inserted into an Act passed, or subordinate instrument made, before 1 January 2001 by an Act passed, or subordinate instrument made, on or after that date.

The third step in the analysis under s 89H(3) is to ask which theoretical exercise of rights would result in the maximising of the value of the interest of the interested person. The answer is an exercise of the amendment power to provide for the whole of the Trust Fund to be held for that person alone.
Finally, the value of that entitlement must be worked out. In this case, it is 100% of the value of the Trust Fund. The value under s 89H(3) in this case therefore is 100%.

[2025] VSC 484

13 August 2025