Transferring Shares, Cancelling Shares or Varying Shares? Landholder Duty, Corporate Trustee Duty and Other Risks for your Firm to Manage

Taxation & Revenue

minutes reading time

DATE PUBLISHED: September 18, 2023

key takeaways

  • Three cases have been recently decided on landholder duty in Queensland, Victoria and South Australia.
  • The Queensland Revenue Office has been active in conducting reviews and investigations.
  • The landholder duty regime is complicated and nuanced. Advisers need to hit pause and transfer all duty risks back to clients on any transactions relating to shares and units.
  • Advisers need to understand the landholder duty risks in all states and terrirtories before dealing in shares or units, even companies that do not own land.
  • Also, advisers commonly forget about all of the other issues and risks that must be addressed with clients, whether that be income tax, additional foreign acquirer duty, foreign investment rules, security and encumbrances etc.

There are significant ways to trip up on the seemingly simple task of transferring, varying or cancelling shares in a company. 


As recent experience with federal and state revenue offices shows, it is quite easy for long term historical records for share transfers, variations and cancellations (ASIC searches are easily relied upon by revenue offices to create investigations) to be matched with the ownership of land or other valuable assets.

Reason 1: Does corporate trustee duty apply?

Example: a transfer of shares in a corporate trustee company 

ABC Pty Ltd is the corporate trustee of a discretionary trust, which owns land and business assets.

Irrespective of what percentage of shares is acquired, in Queensland, corporate trustee duty could be payable if, amongst other things, “the acquisition is part of an arrangement under which any person obtains, directly or indirectly, a benefit relating to the property held by the corporate trustee on trust”.

reason 2: Does landholder duty apply?

Example: a transfer of shares in a corporate trustee company

If the corporate trustee owns “land-holdings” in Queensland, then landholder duty may apply to a dealing in shares in the corporate trustee.
That is, in Queensland, there is a specific rule that surprises many clients and advisers that the corporate trustee is taken to have land-holdings if that “land” is held on trust AND where the trustee is a beneficiary of the trust.
Example: a transfer of shares in a company that is not a trustee, and does not own land
In some states and territories, there are rules that state that a beneficiary of a discretionary trust is taken to own or otherwise be entitled to the property of the trust.
A company that falls within the class of beneficiaries of the trust would be regarded as owning any land of the trust, and to the extent that the total value of the land held in the trust exceeds the threshold in that jurisdiction, the company would be treated as a landholder for the purposes of landholder duty.

Reason 3: Does income tax (including CGT) apply?

Example: Mum and Dad own 100% of the shares in a trustee company. Those shares have negligible cost base.
Dad transfers his shares in the trustee company to his wife.
In the past, the trustee company has received unpaid present entitlements from a connected discretionary trust in its own right and not as trustee.
There is income tax or CGT on the transfer of shares. 

Reason 4: Is there some restriction or server consequence for the share transfer?

Not all share transfer are free from restriction, limitation or conditionality.

Examples include:

  1. Restrictions in the Corporations Act on redemptions and cancellations.
  2. Rights of pre-emption.
  3. Security interests over the shares - are the shares subject to a register or unregistered security interest?
  4. Non-compliance with a provision in the constitution or other agreement.
  5. Foreign Investment Review Board, and Foreign Acquisitions and Takeovers Act 1975 (Cth) breaches, penalties and risks for advisers "aiding and abetting".

Next steps and free checklist

As these practical, common examples show, any transfer of shares needs a transfer of risk moment to clients and for clients to understand the risk, and in most cases, for advice to be provided to the client on the risks. 

This creates opportunities for advisers to provide more consulting and, from the professional's perspective, the ability to provide quality advice to protect clients.

Please contact us at to get a checklist for your accounting firm, law firm or financial planning firm to assist staff in reminding clients and staff not to do share transfers or redemptions/cancellations of shares until advice has been provided to the client on the various risks. 

how mcw can assist

We recommend you and your clients instruct our Taxation and Revenue team to:

  • advise on any tax, duty consequence for any share transfer, redemption, or cancellation;
  • advise on any connected issues regarding security interests, additional foreign acquirer duty, FIRB, Corporations Act or contractual restrictions;
  • conduct a detailed review of the relevant structure to identify the "landholder" and "subsidiaries" and/or "linked entities" of the "landholder" that may be potential beneficiaries of discretionary trusts that hold land;
  • preparing deed(s) to exclude the "landholder"/"linked entity" beneficiaries as a beneficiary of the discretionary trusts(s);
  • making an application to the appropriate Commissioner to ascertain a beneficiary's entitlement to a trust's land;
  • making an application to the appropriate Commissioner for a discretion to be exercised to exclude the land-holdings of the discretionary trust(s). 


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