The Director Who Didn't Buy Anything and Still Owed $170,000 in Duty

Tao v Commissioner of State Revenue [2025] VSC 831

Imagine this: a property trust is in trouble, and its director is accused of mismanaging finances. One of the unitholders steps in, takes over as director and sole shareholder of the trustee company without buying a single extra unit in the trust and without the property changing hands. Then the tax office sends a bill for $170,000 in stamp duty.

That is exactly what happened in Tao v Commissioner of State Revenue (Tao Case), a Victorian Supreme Court decision that has sent ripples through property, tax and trust advisory circles. The message is confronting: in Victoria, you can be taxed as if you bought land, even if you haven’t.

What Is Landholder Duty?

Stamp duty in Victoria is not just for property purchases. It can also apply when you acquire an interest in a company or trust that holds land, this is called landholder duty. The principle is simple: property-rich entities should not change hands duty-free just because the land itself never moves.

What made the Tao Case significant is that it tested section 82 of the Duties Act 2000 (Vic) (the Act), a provision most practitioners treated as a dormant anti-avoidance measure. The Supreme Court confirmed it is anything but dormant. Section 82 allows the State Revenue Office (SRO) to deem someone to have acquired a 100% interest in a landholder simply by acquiring "control" over it and the concept of "control" is far broader than most people assume.

Background Facts

Mr Tao indirectly held some units in the WCT Unit Trust, which owned Victorian land worth over $1 million. When the trust's director was accused of mismanagement, Mr Tao acquired all the shares in the trustee company and became its sole director. He acquired no additional units in the trust and beneficial ownership was untouched.

The SRO assessed him for duty anyway, $199,650 plus penalties. VCAT upheld the assessment, finding Mr Tao had acquired practical control over the trust's financial and operating decisions. His hands-on involvement, negotiating loans, directing refinancing decisions, orchestrating the eventual property sale, was evidence enough. VCAT reduced the deemed acquisition from 100% to 85% to reflect his pre-existing indirect economic interest, bringing duty to approximately $169,702.50. The Supreme Court dismissed his appeal, confirming VCAT’s approach

Why It Matters

The Court confirmed four things that should be on every property owner's radar:

1. Changing directors or shareholders of a trustee company can trigger landholder duty;

2. Section 82 of the Act is a standalone head of duty, not merely anti-avoidance;

3. Practical influence is sufficient to establish "control"; and

4. Beneficial ownership is irrelevant to the analysis.

Think about how many everyday arrangements this could catch:

• Succession planning, handing a trustee company to the next generation.

• Relationship breakdown, one partner gaining sole control after separation.

• SMSF restructures, changes to a corporate trustee holding property.

• Estate planning, adult children stepping into director roles.

In none of these situations is anyone typically thinking "stamp duty." That is the problem.

What To Do

With the broad interpretation of “control” in the Tao Case, we recommend that you:

1. Review proposed changes early

   Any change to the directorship or shareholding of a trustee company over Victorian land should be reviewed for section 82 of the Act exposure before it happens.

   
   

2. Consider past restructures

   If past restructures gave someone sole control of a trustee company holding land, it may be worth assessing whether a duty liability should have been lodged.

   
   

3. Strengthen governance documentation

   If governance is genuinely shared, document it – clear records of collaborative decision -making can be the difference between owing duty and not.

Conclusion

The Tao Case is a reminder that "who owns what?" is no longer the only question that matters. "Who decides what?" now carries real financial consequences. If you are considering any restructure involving a trust or corporate trustee holding Victorian property, contact our people before making changes.

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Helen Jeon 0457 811 882