Key Takeaways
- For contracts entered into from 17 August 2026, purchaser contributions towards a vendor’s liability for land tax, windfall gains tax and congestion levy liabilities may form part of the dutiable value of a transaction.
- Purchasers, vendors and property professionals should review duty calculations before settlement.
New guidance from the SRO
For many property transactions, duty is calculated by reference to the purchase price. However, the State Revenue Office's (SRO) new ruling confirms that the dutiable value of a transaction may extend beyond the purchase price, with certain payments made by a purchaser towards a vendor's tax liabilities also attracting duty.
Issued on 20 July 2026, Ruling DA-070: Land transfer duty – Assumed tax amounts (Ruling) provides guidance on when these payments will constitute an Assumed Tax Liability Amount and form part of the dutiable consideration for a transfer of land under section 20(1) of the Duties Act 2000 (Vic).
What is an Assumed Tax Liability Amount?
An Assumed Tax Liability Amount arises where a purchaser agrees to contribute towards, or pay, a vendor's tax liability in connection with a land transaction.
The Ruling provides that these amounts will form part of the consideration for a transfer where they are part of what “moves the transfer”. In practical terms, where a purchaser agrees to pay an amount in addition to the purchase price in connection with the transfer of the land, that amount may also attract duty.
Which Amounts are Captured?
The Ruling identifies three categories:
- Land tax adjustments: A purchaser's contribution towards a vendor's land tax liability may form part of the dutiable value where the sale price is at or above the current threshold amount of $10.7 million (subject to annual CPI adjustment). This threshold applies to land tax only, not to WGT or the congestion levy.
- Congestion levy liabilities: A purchaser's contribution towards a vendor's congestion levy liability for a car park may also be treated as dutiable consideration.
- Windfall Gains Tax (WGT): Where no WGT liability exists when the contract is entered into, but the purchaser agrees to contribute towards a WGT liability that arises before settlement, that contribution may form part of the dutiable value.
The Ruling confirms, however, that standard council rate adjustments are not treated as Assumed Tax Liability Amounts and do not need to be disclosed as part of the dutiable value. The ruling is silent as to the treatment for water rates, however it would be reasonable to assume that the normal adjustment of the water rates for the year in which settlement takes place would be excluded in much the same manner.
Date of Effect
The new positions on land tax and congestion levy apply only to contracts entered into on or after 17 August 2026. The WGT position restates the SRO’s existing views.
Late settlement interest remains a separate issue
The Ruling
does not address late settlement interest or default interest, which are dealt
with separately.
The
existing SRO position remains unchanged: a transaction must be re-lodged for
duty reassessment where late settlement or default interest is $5,000 or
more. No re-lodgement is generally required where the amount is below that
threshold.
What does this mean for you?
Purchasers, vendors and property professionals should review transaction documents and settlement adjustments carefully to ensure any Assumed Tax Liability Amounts are properly identified and accounted for.
In particular:
- Duty estimates must account for all Assumed Tax Liability Amounts – calculating duty on the purchase price alone (including GST) is not necessarily sufficient.
- Duties Online forms must disclose any relevant land tax, WGT or congestion levy adjustments as part of the dutiable consideration.
- Vendors should ensure that adjustments to their tax liabilities at settlement are reflected accurately in transaction documents. This presents a particular challenge for short settlements or where adjustments are not capable of being determined for a settlement date that may not specifically be known – especially in the context of a delayed settlement.
- Contracts signed before 17 August 2026 are not affected by the new land tax and congestion levy positions.
How we can help
The Ruling is a timely reminder that duty may be payable on more than just the purchase price. Whether you are purchasing or selling property, preparing duty estimates, or structuring a transaction, obtaining advice early can help ensure duty is calculated correctly and transaction documents accurately reflect any land tax, WGT or congestion levy adjustments.
Our Property & Development team can assist with reviewing contracts, settlement arrangements and duty implications to help identify potential Assumed Tax Liability Amounts, manage compliance risks and avoid unexpected reassessments.
If you would like to discuss how this decision may affect your project transactions, please contact Mark McKinley or a member of our Property & Development team.
This eAlert is a general summary only and does not constitute legal advice. You should seek specific advice in relation to your own circumstances.
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Authors: Chantal d’Argaville and Mark McKinley