The Victorian Supreme Court in Alphington Developments Pty Ltd v Commissioner of State Revenue [2025] VSC 709 considered the dutiable value for a transfer of land under paragraph 20(1)(a) of the Duties Act 2000 (Vic) and whether payments required to be made by the vendor under a contract were able to reduce the headline purchase price for stamp duty purposes.

Link: https://austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSC/2025/709.html

Background

This case considered two transfers of land at the old Alphington Paper Mill site under a single contract for the sale of land.

Under the contract for the sale of land, a headline purchase price was given for the parcels of land with the vendor required to pay for certain demolition and remediation works (to be procured by the purchaser).

The first transfer (Transfer 1) occurred in 2016 and the second in 2017.

The consideration stated in the land transfers were the reduced amounts, taking into account the vendor’s contributions.

For example, for Transfer 1:

Description
Portion of deposit relating to Transfer 1	$3,402,439.01
Balance as per the Contract	$31,000,000
GST calculated under the margin scheme	$770,866.70
Less Vendor’s Works Costs (GST exclusive)	($4,869,772.01)
TOTAL DUTIABLE VALUE	$30,303,533.70

The reduced amount reflected the actual cash payments made under the contract for the sale of land to the vendor (including GST).

Duty was initially assessed on the amounts as provided in the land transfer forms (ie for Transfer 1, $30,303,533.70).

In 2020, the Commissioner reassessed the transfers to duty excluding the vendor’s contributions. For Transfer 1, the reassessment was based on a dutiable value of $35,173,305.71.

Subsection 20(1) of the Duties Act 2000 (Vic)

Subsection 20(1) provides:

20 What is the dutiable value of dutiable property?

(1) The dutiable value of dutiable property that is the subject of a dutiable transaction is the greater of—

(a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration); and

(b) the unencumbered value of the dutiable property.

The Supreme Court had to decide whether the consideration for the transfers of land included the full headline purchase price or the reduced price actually payable and recorded in the land transfers.

Applicable legal principles

The parties agreed that the relevant principles were (at paragraph 32):

(a) ‘Consideration’ in s 20(1)(a) of the Duties Act ‘is not to be read as requiring identification of the consideration sufficient to support a contract’.

(b) ‘The word “consideration” should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts.

(c) The consideration is ‘the money or value passing which moves the conveyance or transfer’.

(d) The approach taken by the High Court is to ask: ‘what was received by the Vendors so as to move the transfers to the Purchaser as stipulated in the Agreement’ made by the parties.

These were based on the High Court’s decisions in Dick Smith (Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3), Archibald Howie (Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28 and Lend Lease (Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51).

The Supreme Court also considered the High Court’s very recent PepsiCo Inc case (Commissioner of Taxation v PepsiCo Inc [2025] HCA 30) and noted at paragraph 33:

Relevantly, the majority observed that whether payments made constitute ‘consideration for’ a transaction ‘will always depend upon what the parties have agreed. In that respect, the word “for” connotes a causal connection between the making of a promise to pay or confer some other benefit and the receipt of a right [in that case, a right to use intellectual property]. That connection will be satisfied when the giving of the promise can be seen to be the basis for, or a condition of, that receipt.’

Arguments

The purchaser argued that the consideration for the dutiable transfers of land must take account of all relevant payment obligations under the Contract, which included both the payment of the Purchase Price to the Vendor. The purchaser noted that this was the market value of the land (in its unremediated condition).

The Commissioner argued that consideration passes to a vendor, not from it and that the amount that the Vendor was obliged to pay under the contract for the sale of land could not be said to have moved the transfer.

Decision

The court identified four promises in the contract (at paragraph 38), being:

(a) The Vendor will transfer the relevant properties to Alphington.

(b) Alphington will pay the Vendor the Purchase Price.

(c) Alphington must procure, at its own expense, works described in the Contract as the ‘Demolition Works and the Remediation Works’.

(d) The Vendor must pay to Alphington sums in respect of those works.

The court held that the higher headline purchase price was the consideration for the transfer, on the basis that:

The payment of the headline amount moved the Vendor to make the transfers. Stating that “if the Vendor had been relieved of the obligation to make payments (for whatever reason) there is little doubt it would have remained willing to proceed with the transfers”.
“[I] a payment made by the Vendor is not consistent with the normal understanding of consideration being that which passes to the Vendor”.
The payment obligations were directed to different matters – the payment for the remediation works is not “for” the transfer.
The timing of the payment obligations were distinct – the payment for the vendor’s works was not referrable to the date of settlement.
There were no default provisions requiring the repayment of the vendor’s works payments if the sale of land did not eventuate.

Is the decision correct?

What appears to be missing from the decision is the position that in Victoria, only the land transfer is a dutiable transaction. The contract for the sale of land (unlike most other mainland States and Territories) is not itself a dutiable transaction.

Therefore, it is only the consideration for the transfer of land that is relevant, not the consideration under the contract for the sale of land.

The consideration for the land transfer was stated in the transfer to be the net amount – identified as a dollar figure.

The case did not proceed on this basis, but rather took the position that it was the consideration under the contract of sale that was dutiable.

While the Court put the proposition “if the Vendor had been relieved of the obligation to make payments (for whatever reason) there is little doubt it would have remained willing to proceed with the transfers” – the answer is, of course, the purchaser would not have been willing to proceed.

Further, from the decision, it appears that the cash payments on settlement followed the net amount, not the headline purchase price. If this is correct, again, it shows that what

Lastly, the absence of default provisions could be explained in the case of the default, the vendor would get the benefit of the remediation and demolition works as it would be left holding a property worth more than the unremediated site – in other words, the absence of specific default provisions is itself an allocation of costs on default.

The decision may also have been different if the vendor’s payments were expressly provided in the contract to be adjustments to the purchase price.

The case does confirm that it is important to very carefully draft contracts of sale where there are changes to the headline purchase price.

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Please contact us with any questions on State Tax issues.

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

This update was prepared with the assistance of Priya Anand, Seasonal Clerk.