In a case run by Sladen Legal, Merristock Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2024] VCAT 535, the taxpayer has successfully appealed against a Victorian State Revenue Office (SRO) determination that land owned by the taxpayer was not eligible for the primary production land tax exemption.

This case involved land that was urban zoned and inside Greater Melbourne. Therefore, the strict requirements of sections 67 and 67B of the Land Tax Act 2005 must be satisfied. The SRO accepted that all of those requirements were met but one – referred to in the judgment as the Beneficial Owner Condition. The Beneficial Owner Condition requires that all of a land owning company’s shares are “beneficially owned” by natural persons.

Here, 20% of the shares were held by natural persons as trustees of a discretionary trust. The SRO therefore argued that those shares were not “beneficially owned” by the natural persons (as they held the shares as trustees of a trust).

The Tribunal found that the shares were beneficially owned by the natural persons for two critical reasons:

Beneficially owned (as contrasted with beneficially held) could include where shares were held by trustees of a trust; and
Where shares are held by a discretionary trust then the trustees are legal and beneficial owners of the shares.

This is an important decision for companies that hold urban zoned land in Greater Melbourne as structures that may have previously been denied the exemption will now be eligible for the exemption.

For further information please contact:

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au

Nicholas Clifton
Principal Lawyer
T +61 3 9611 0154 | M +61 401 150 955
E nclifton@sladen.com.au

Meera Pillai
Associate
T +61 3 9611 0179
E mpillai@sladen.com.au