The State Revenue Office of Victoria (SRO) has released a draft ruling DA-070 https://www.sro.vic.gov.au/about-us/laws-legal-cases-and-rulings/draft-rulings/land-transfer-duty-consideration-assumption-tax-liabilities that could significantly affect stamp duty outcomes in higher-value property transactions.

The core principle

Stamp duty in Victoria is calculated on the “dutiable value” of a transaction — which is generally the purchase price or market value (whichever is higher).

The draft ruling clarifies that if the buyer agrees to pay some of the seller’s tax in respect of the land, the SRO may treat that amount as extra purchase price for stamp duty purposes.

Which taxes are affected?

The ruling is targeted on three Victorian taxes:

  • Land tax
  • Windfall gains tax (WGT)
  • Congestion levy

Ordinary settlement adjustments such as council rates and water charges are not captured by the ruling in the same way.

For land tax, the Sale of Land Tax Act 1962 only allows buyers to assume some or all of the vendor’s land tax liability at or above a value threshold being $10.4 million for the year starting 1 January 2025 which is adjusted annually in line with CPI.

For the WGT, the ability for the buyer to assume WGT liability only is possible if no WGT liability exists at the time the contract is entered into. Therefore a buyer can only assume a WGT liability if such liability does not exist at the time of entering into the contract, but arises before settlement and this is agreed in the contract terms.

When does this apply?

The ruling will take effect from 1 February 2026 in respect of land tax. For other taxes and rates, the Commissioner considers the view’s in the draft ruling as a restatement of existing views.

Comments on the draft ruling must be submitted by 5pm 24 December 2025.

Why this matters in practice?

Where a purchaser assumes a large land tax or WGT exposure, duty may be payable not just on the property price, but also on the tax amount taken on.

This also means:

  • Contract wording becomes critical
  • Headline purchase price alone is no longer sufficient for duty analysis
  • Acquirers may face higher funding and transaction costs than expected

Key takeaway

If a deal involves the purchaser absorbing a vendor tax liability, stamp duty may be higher than anticipated. Buyers, sellers and advisers should review contracts carefully and model the duty consequences early in negotiations.

Please consult your HLB Mann Judd tax advisor for any queries or assistance you may require.

As the ruling is currently in draft form, affected parties should seek updated advice before entering into transactions after it becomes final.