Duty is payable under the Duties Act 2000 (the Act) when property is transferred from one party to another, unless an exemption applies.
The transfer of all, or part, of a family farm may be exempt from duty if the transfer meets certain conditions relating to the land and there is a familial link between the transferor and the transferee and the transfer is not part of a tax avoidance scheme.
The exemption applies to land that is used for primary production as referred to in ss. 65-67 of the Land Tax Act 2005. Different conditions apply, depending on the location of the land.
For land that is not in an urban zone of greater Melbourne, the exemption applies to land used primarily for primary production.
For land that is wholly or partly in an urban zone of greater Melbourne, the exemption applies if the land is used solely or primarily for a business of primary production.
The exemption allows the transferor to be a:
- natural person (a term used to distinguish a person from a company, trust or institution)
- company in which all the shares are owned by related natural persons
- trustee for a
- natural person
- discretionary trust of which the capital beneficiaries are limited to related natural persons
- fixed trust of which the beneficiaries are limited to related natural persons
The transferee can be a natural person, or the trustee of a fixed or discretionary trust.
If the transferee is a natural person, they must be a:
- relative of the transferor. This includes a relative of a deceased partner of the transferor
- shareholder in the transferor company
- beneficiary under the transferor trust
If the transferee is a trustee, certain conditions apply.