Victorian capital raising | Risk of landholder duty and the Oliver Hume case


The VCAT decision in Oliver Hume Property Funds v Commissioner of State Revenue held that units issued to investors under a capital raise via an Information Memorandum (IM) to fund the acquisition of a property in Victoria are to be aggregated as associated transactions for the purpose of the landholder duty rules.  

This means that investors acquiring an interest in a Fund through the IM after the Fund has entered into a contract to acquire property may be subject to landholder duty, effectively imposing double duty on the transaction.  

The taxpayer is appealing the decision. In the meantime, capital raisings with respect to Victorian property will need to be more carefully managed. The State Revenue Office (SRO) is unlikely to provide a private ruling with respect to this issue until the appeal is determined. The SRO has stated in discussions that there were particular circumstances in the Oliver Hume case that led to this outcome. However, the relevant facts as referred by VCAT noted nothing significantly different from any other capital raising through an IM or Product Disclosure Statement (PDS). It seems that the 2 factors that the SRO and the court focused on were: 

  1. in order for shares to be issued to investors, a minimum subscription needed to have been met 
  2. there was a unity of investors, in that they were all joining together to acquire an interest for a common purpose, being a particular residential project.  

Both of these factors are common in most offers under an IM or PDS. SW is working with the Property Council of Australia and Law institute of Victoria to have further discussions with the SRO to get a better understanding of what made the facts and circumstances of the Oliver Hume case different, and to understand their position with respect to reviewing capital raising transactions in the past and in the future, as we await the court’s decision.  

As discussed below under Background, the legislation is drafted widely and we are of the view that the legislation needs to be amended to ensure that capital raises are not captured under the landholder duty provisions (regardless of the outcome of this Appeal). The outcome of double duty for funds trying to raise capital to acquire property in Victoria will be an inhibitor to property acquisitions in Victoria.  

The outcome in this case also raises uncertainty with respect to other States (except for NSW) that have similar provisions drafted for the aggregation of associated transactions.  


In Victoria, landholder duty only applies to investors who acquire a significant interest an interest of 20% or more if the landholder is a private unit trust, and 50% or more if the landholder is a private company.

In determining whether a landholder has acquired a significant interest, the interests of associated persons and interests acquired in associated transactions are aggregated and treated as a single acquisition.  

The term associated transaction is quite broadly drafted as an acquisition of an interest in a landholder by another person in circumstances which: 

  • those persons are acting in concert, or 
  • the acquisitions form, evidence, given effect to or arise from substantially one arrangement, one transaction or one series of transactions.  

Given the broad definition in the legislation, the Victorian State Revenue Office released Revenue Ruling DA.057 Meaning of Associated Transaction which stated that the Commissioner will not regard acquisitions of interests by independent members of the public as an associated transaction if the acquisitions are made in response to a genuine public offer under a product disclosure statement or prospectus lodged with the Australian Securities and Investments Commission. However, this will not apply if: 

  • under the public offer, one person’s acquisition in a landholder is made subject to and conditional upon another person’s acquisition, or 
  • the Commissioner considers that a person is taking advantage of this concession, particularly in cases where the public offer does not convert the landholder to either a listed company or public unit trust scheme.  

Example 2 of the ruling also provides an example where a private unit trust raises funds from 15 investors known to the responsible entity. In this example, the investors can apply for any number of units and their acquisition would not be conditional upon achieving a minimum level of subscription. The SRO’s view was that the investors' acquisitions would not be considered associated transactions.  

Oliver Hume case 

In our view, the facts of the Oliver Hume case are no different from capital raises by other Funds through Information Memorandums (IMs). The facts were as follows: 

  • a special purpose entity (SPV) was established to acquire a site for a resi development 
  • the SPV was funded by debt and equity 
  • the fund was marketed to sophisticated investors so it was not an ASIC regulated raising 
  • the IM was distributed to investors appearing in Oliver Hume’s database. Oliver Hume held a database that had details of investors who had invested in their funds in the past 
  • the IM was also distributed to third parties as part of consultancy and referral agreements 
  • as soon as a target of $1.8 million is achieved, shares will be allotted to investors 
  • $1.8 million shares were offered at $1 to some 18 investors 
  • 14 of the 18 investors were from Oliver Hume’s database, 4 were external (2 were referred from the consultancy agreements and 2 were completely external).

The SRO commenced their investigation in 2017 and a decision was made in 2019 that the taxpayer was subject to landholder duty. As the SRO viewed the arrangement as substantially one arrangement, the interests acquired by the purchasers were aggregated and the landholder duty assessment was raised in 2020 for 99.99% of the land value in 2020. In 2021, the SRO made a determination confirming the assessment (but partially remitting penalties). Oliver Hume requested the decision be referred to VCAT.  

Court decision  

The court held that regard must be had to the actions and motives of both the transferor and transferee. The shareholders (although not associated with each other) each had a united purpose of becoming shareholders in the Company. The Commissioner outlined the following factors in support of the view that the transactions were related, connected and interdependent in a way that was integral to the circumstances: 

  • transactions stemmed from the same offer and terms outlined in the IM 
  • transactions were conditional on each other and interdependent, they would only occur if target subscriptions were met  
  • purpose of the transactions were the same – raise $1.8M as part of a syndicated managed investment vehicle for a residential development project 
  • investors applied to invest around the same time and under the same offer with documents defining the common purpose  
  • possible to infer a unity of purpose for the investors, as they agreed on the terms based on the IM to support the development of the property and agreed to the constitution which established the management structure.  

The Court also held that the Commissioner’s concession provided in the Ruling has no force in law.  

How SW can help

The SW team has extensive experience assisting property fund managers across a broad range of accounting and advisory services.

We can provide you with expert advice across the lifecycle of your fund, from initial setup and structuring, to capital raising, compliance, risk management and more.

Should you have any questions on the implications of this decision on your individual business circumstances, please reach out to your SW contacts listed here.

Our team will closely monitor the case and provide further information if there are any updates.


Robert Parker

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