Land Tax aggregation has long been a source of pain for South Australian landowners, who face the highest rate of Land Tax in Australia. One trap has been RevenueSA’s view on when two or more landholding trusts are sufficiently different to be disaggregated. The Commissioner’s longstanding practices have now been publicly released in Revenue Ruling LT 004.


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Land Tax Guide 2020


Multiple Holding

Where a taxpayer owns two or more pieces of land the value of the land will be aggregated for the purposes of Land Tax. No Land Tax is levied on land valued below $323,000. The rates then increase up to a maximum of 3.7% above $1.078M. For example :

  • Three properties with land value of $330,000 which are disaggregated would incur land tax of $210 total;
  • Those same three properties aggregated (total value $990,000) would incur land tax of $9,206; and
  • Purchasing another 3 propertiesĀ  (total value $1,980,000) that are aggregated would incur land tax of $45,030!

Disaggregating properties for the purposes of Land Tax is therefore very important.

Multiple Trusts

Up until 2007 it was common for taxpayers to use minor holdings (below 5%) to create different combinations of ownerships. A different ownership combination constitutes a different taxpayer, and therefore each property would be disaggregated. However, minor interest are now ignored.

Since that time there has been increasing use of different trusts to create different ownerships. That is, each property will be owned by a different trust. To reduce costs the same trustee is often used. Each trust is a different taxpayer, and therefore the properties will be disaggregated.

The Problem

Revenue SA has long held the view that for a trust to be treated as a different taxpayer to other trusts, each trust needs to be for a “different beneficiary”. The correct interpretation is that this requirement for a “different beneficiary” (in s13(3)(b)) relates to bare trusts and other trusts where a beneficiary has an interest in the trust property. However, in relation to discretionary trusts (and modern unit trusts) this view is nonsensical because the trust property is not held for any beneficiary. If the trust property is not held for any beneficiary, how could any two trusts be for the same beneficiary?

The Ruling

The Ruling confirms Revenue SA’s long held (incorrect) view. It also sets out some other relevant aspects of their view:

  • The test for beneficiaries is to look at the list of potential beneficiaries for the trusts and compare them. If they are the same then the trusts will be aggregated. (Yes, the list certainty view of discretionary trusts went out withMcPhail v Daulton [1970]. But nevertheless, this is the approach)
  • Changes of the rights of beneficiaries in that list will not create a difference in the trust. Eg rights to income or capital or the identity of takers in default.
  • The wording of the beneficiary list does not matter. What matters is the identity of the potential beneficiaries with “capital entitlements”. This means that it will not be sufficient to disaggregate to buy each trust deed from a different law firm
  • The pattern of distributions to beneficiaries is irrelevant.
  • Income beneficiaries are irrelevant for the purposes of this test. This means that removing a potential beneficiary for the purposes of income (but not capital) will not disaggregate the trust. Removing a potential beneficiary for income (but not capital) has been popular because it does not trigger Stamp Duty (see SDA003). The accords with the general rule of thumb Revenue SA has that if you wish to disaggregate land, you need to need to pay Stamp Duty.

Although the Ruling is contrary to the proper legal interpretation of s13(3)(b) and to the nature of trusts, taxpayers should expect to need to resort to the Supreme Court in order to have trusts dealt with other than by way of this Ruling. Yes that is expensive (and also raises issues regarding the Rule of Law) but unfortunately that is the reality.

The Solution

I have long advised clients of Revenue SA’s views on this matter, and that rather than have an expensive fight with the Commissioner, the most cost effective solution is to have a slightly different set of beneficiaries for each trust. Each trust can then have the same trustee.

For example, if the potential beneficiaries are as follows:

  • Trust 1: John Smith, his relatives and his related companies and trusts but not Trust 2
  • Trust 2: John Smith, his relatives and his related companies and trusts but not Trust 1

These two trusts would be disaggregated under the Commissioner’s view of s13(3)(b) of the Land tax Act. For unit trusts what is needed isĀ a different mix of unit holders.

Taxpayers may also set up each trust with a different trustee, which means that at first instance each trust will be disaggregeted (under s13(4)) – although the Commissioner has been known to argue about whether identical trusts with different trustees can be disaggregated in this way.

If you wish to have a trust that will be disaggregated from others of its type:

  • Go to and login (or create an account)
  • Under ‘Wholesale Documents’ select ‘Discretionary Trust’
  • Select ‘Advanced Options’
  • Under ‘Customised Beneficiaries’ select ‘Different trust under s13(3)(b) Land Tax Act (SA)’

The trust deed will be instantly generated and emailed to you. The trust deed may also be created on white label or with your firm’s branding, for resale at retail prices.

I also note that for commercial property, Stamp Duty is being phased out, reducing the cost of a simple transfer to a new entity.

Adrian is the Principal of Cartland Law, a firm that specialises in devising novel solutions to complex tax, commercial and technological legal issues and transactions