Sub-sale Provisions 

“Sub-sales” refers to when stamp duty is triggered on what is economically a single property transaction, due to the operation of Victoria’s sub-sale provisions in the Duties Act (Duties Act 2000).

This typically happens when an original purchaser under a contract “sub-sells” or nominates another purchaser to take over before settlement.

In some circumstances, the law deems there to be two separate dutiable transactions: one from the vendor to the first purchaser and another from the first purchaser to the ultimate purchaser – hence two sets of duty (double duty) are payable.

These rules exist to prevent duty avoidance through contract novation or nominations that mask what is effectively a resale of the property.

As part of our Property Taxes in Victoria series we provide a detailed overview of the most common property duties and land taxes. Please note that tax laws, thresholds and tax rates are subject to annual revisions, so check the relevant government website for the latest information.

When does the Sub-Sales apply?

Double duty under sub-sale provisions will apply if either:

(1) the ultimate purchaser (substitute nominee) pays any additional consideration to the original purchaser for the transfer right, or

(2) there is any “land development” undertaken on the property between the time of the original contract and the nomination/transfer.

“Land development” is defined broadly and includes actions like applying for or obtaining a planning permit or building permit, subdividing the land, starting any construction, or even doing “anything that improves the land’s value” in that interim.

One scenario is when a buyer signs a contract, then before settlement they apply for a council planning permit (perhaps to speed up development plans) and also decide to nominate their related company as the purchaser. That planning application can be considered “land development,” so the nomination triggers a sub-sale – duty will be assessed on the contract twice (once on the transfer to the nominee, once deemed on the transfer to the initial purchaser).

Also, if the nominee is paying the original purchaser any amount (even reimbursing a deposit or paying for an “interest” in the contract), that can count as additional consideration triggering double duty.

Risks & Tips:

The main risk here is for unwary purchasers (and their advisors) who use nomination without realising the duty consequences relating to reselling for a higher amount or undertaking “land development.

Another risk is informal house-flipping: if Purchaser A signs a contract then finds someone (Purchaser B) to take over the deal for a profit, that profit is additional consideration, triggering double duty.

If you are thinking of nominating a different buyer or have a related entity step in, avoid doing anything that increases the land’s value (permits, improvements) until after settlement

How to contest:

If the State Revenue Office assesses double duty and you believe it’s wrong you can object to the assessment. Like all disputes with the State Revenue Office you will need to provide evidence and clear legal reasoning.

Given the definitions in legislation are broad, these objections can be challenging. Alternatively, the SRO does provide rulings that clarify what counts as land development – these can be used to support your case if facts differ.

Ultimately, if you’re not satisfied with the SRO’s response, you could take the matter to VCAT or the Supreme Court.

However, prevention is far better than cure here: once duty is assessed twice, it’s an uphill battle to prove it shouldn’t have been. Legal representation is essential in contesting these, as it hinges on legal definitions and fine details of what occurred when.

If you have any queries or need assistance with state or federal taxes contact our team for assistance and clear legal advice.

About The Author - Jack Chee

Jack Chee is a Special Counsel in the litigation team in our Sydney office. Admitted in Australia and Hong Kong, he has practised since 2005 and has extensive experience across private practice,...