Exception From Aggregation For Domestic Builders

Victorian land transfer duty is calculated at aggregate rates. The rates increase as the dutiable value increases. As a result, where multiple dutiable transactions are treated as one transaction, the duty outcome may be materially different from the outcome if each transaction were assessed separately.

Under the Duties Act (Vic) 2000, multiple dutiable transactions are aggregated and assessed as a single transaction. However, an important exception exists for registered domestic builders acquiring vacant land for residential development and sale to the public.

This is commonly referred to as the Domestic Builder Exception.

Aggregation Under Section 24 of the Duties Act

Section 24(1) of the Act provides that dutiable transactions relating to separate items or separate parts of dutiable property are to be aggregated and treated as a single dutiable transaction where:

The contracts of sale are entered into within 12 months; and
The dutiable transactions together form, evidence, give effect to or arise from what is substantially one arrangement.

Revenue Ruling DA-026v3 provides guidance on how and when dutiable transactions are aggregated under section 24(1) of the Act.

Under section 24(2), dutiable transactions are not aggregated if the Commissioner of State Revenue is satisfied that:

The dutiable property the subject of the dutiable transactions is vacant land;
The transferee is registered as a “domestic builder” under the Building Act 1993 and is “builder” within the meaning of the Domestic Building Contracts Act 1995; and

The transferee intends to construct residential premises on the vacant land for the purpose of selling that land to the public.

If the transferee does not construct residential premises on the vacant land, the Commissioner may reassess the dutiable transactions that were not aggregated due to the Domestic Builder Exception at a later date.

What Is “Vacant Land”?

The term “vacant land” is not defined in the Act.

In its ordinary meaning, “vacant” means “having no contents; empty; void” – Macquarie Dictionary. In the context of section 24(2) this means the land must be empty of building or structures, not merely unoccupied.

Section 24(7) provides that the Commissioner may treat land as vacant if satisfied that it is substantially vacant apart from there being the remnant of any building or other object or structure, that has been preserved because of its heritage.

Who must be registered as a domestic builder?

Section 24(2)(b) requires to Commissioner to be satisfied that the transferee is registered as a domestic builder under the Building Act and is a builder under the Domestic Building Act. Where there is more than one transferee each transferee must satisfy both requirements. Under the Building only an individual or a company may be registered as a domestic builder.

Companies

If the transferee is a company, that company must be registered as a domestic builder under the Building Act at the time the dutiable transaction occurs.

It is not sufficient that a director, shareholder, officer, related entity, or associated person holds the registration.

Individuals

If the transferee is an individual, that individual must personally be registered as a domestic builder.

Registration held by a company associated with the individual will not satisfy the requirement.

Trustees

Where an individual or company is registered as a domestic builder and acquires land as trustee of a trust, the Commissioner will generally be satisfied that the registration requirement is met, provided the registered individual or company is the transferee.

Builder under the domestic building act

Section 24(2)(b) also requires the transferee to be a “builder” within the meaning of the Domestic Building Contracts Act 1995.

A builder is relevantly defined in the Domestic Building Act as a person who carries out, or intends to carry out, domestic building work. Domestic building work includes the erection or construction of a home and associated works.

The Commissioner will be satisfied that a transferee is a builder under the Domestic Building Act where the transferee is:

Registered as a domestic builder under the Building Act; and
Intends to construct residential premises on the vacant land.

Intention to construct and sell residential premises to the public

Section 24(2)(c) requires the Commissioner to be satisfied that the transferee intends to construct residential premises on the vacant land for the purpose of selling that land to the public. This intention must exist at the time the dutiable transaction occurs.

The Commissioner may consider evidence such as:

planning approvals;
building approvals;
business records;
project documentation; and
the transferee’s history of similar residential developments.

The intention must apply to each parcel of vacant land acquired.

If multiple parcels are acquired, but only some are intended for residential construction and sale to the public, the Domestic Builder Exception will only apply to those parcels which will be sold.

The exception will not apply where, at the time of acquisition, the transferee intends to use or retain the land for another purpose, such as private use or rental investment.

Reassessment of duty where residential premises are not constructed

If dutiable transactions were not aggregated because the Domestic Builder Exception applied, but residential premises are not constructed on the land as intended, section 24A allows the Commissioner to reassess duty if any of the following triggering circumstances occur:

Subsequent transaction without construction (section 24A(1)(a)) – liability arises when the subsequent transaction occurs;
Construction of non-residential premises (section 24A(1)(b)) – liability arises when the non-residential premises are ready for use or occupation; or

Five-year time limit (section 24A(1)(c)) – five years after the land was acquired.

In that case, the Commissioner may reassess those transactions by aggregating them under section 24(1) and recalculating duty on their combined dutiable value, if any of the following triggering circumstances occur.

The transferee must notify the Commissioner in writing within 30 days after becoming aware that any of the abovementioned triggering circumstances have occurred (section 24A(6)). A failure to notify the Commissioner does not prevent the Commissioner from reassessing duty under section 24A (section 24A(7)).

How duty is recalculated

If reassessment is triggered under section 24A duty is recalculated on the original dutiable using the following methodology:

Step 1: Aggregate all the dutiable transactions that would have been aggregated but for the Domestic Builder Exception, using the dutiable value of each dutiable transaction at the time it occurred.

Step 2: Calculate duty on the aggregated dutiable value.

Step 3: Apportion the duty calculated under Step 2 to each dutiable transaction in proportion to its dutiable value relative to the total aggregated dutiable value.

Step 4: For each dutiable transaction that is chargeable with duty as a result of a triggering circumstance described in paragraph 15: the duty payable is the amount apportioned to that transaction under Step 3 less any duty already paid on of the transaction.

Date of effect

The ruling applies to:

Dutiable transactions occurring on or after 1 June 2026 that arise from a contract of sale entered into on or after that date; and
Dutiable transactions occurring on or after 1 June 2026 that do not arise from a contract of sale.

This ruling does not apply to dutiable transactions that occur on or after 1 June 2026 where the relevant contract of sale was entered into before that date.