Property update: Business buyers and assignees of leases ― duty on acquisition of fixtures of significant value now in effect

Nov 26, 2019

Earlier this year, the Victorian Government amended the Duties Act 2000 (Vic) so that acquisition of fixtures of a significant value will attract duty.

The key features of the duty on fixtures are:

  • The duty applies where the value of the fixtures taken as a whole is equal to, or more than, $2 million.
  • If the duty applies, it is calculated by a different method if it is between $2 million and $3 million, and if it is over $3 million. If the value of the fixtures is over $3 million the same rate that applies to property transactions applies to assessing the duty payable in respect to fixtures which is 5.5% of the value of the fixtures.
  • Transactions can be aggregated if the transactions together form or give effect to substantially one arrangement. There is no time limit for aggregating fixture transactions.
  • If there is a business acquisition that includes fixtures in conjunction with the sale of freehold land because duty is already payable on the combined value of the land and the fixtures, these type of transactions are not affected by the new provisions relating to duty on fixtures.
  • The duty is payable by the transferee of the fixtures.
  • The duties on fixtures applies as from 19 June 2019.

Buyers of businesses and assignees of leases ― what you need to know

As fixtures are often assets transferred with transfer of leases or conjunction with sales of goodwill of a business (which may also involve transfer of a lease or leases) it is important that assignees of leases and buyers of businesses are aware that if fixtures taken as a whole have a value of $2 million or more then the transaction can attract duty.

More information

If you are considering entering into a business purchase or lease which involves fixtures valued at $2 million or more, or to understand how this change might impact you, please contact Mark Yaskewych, Principal Lawyer, on (03) 8600 8830, Kylie Marotta, Lawyer, on (03) 8600 0756 or Minka Fennell, Lawyer, on (03) 8600 8818.

Author

This Property update was authored by Mark Yaskewych, Principal Lawyer.

Note: This update is a guide only and is not intended to constitute legal advice.

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