What is a Nomination?
A nomination is the step by which the purchaser named in the contract of sale directs the vendor to transfer the property to someone else, commonly a company, a trustee or a family member. Victorian contracts often anticipate it by naming the purchaser "and/or nominee", and the practice is especially common in off-the-plan purchases.
Nominating does not release anyone. The original purchaser remains liable to the vendor under the contract even after the nominee takes the transfer.1
What is Double Duty?
Double duty is land transfer duty assessed twice on what the parties see as one purchase: once on the original contract and again on the transaction with the nominee.2 More than two assessments can arise if there are multiple nominations.3
When does a Nomination Trigger Double Duty?
Two things trigger it under the sub-sale provisions of the Duties Act 2000 (Vic):
- land development occurring between the contract date and the nomination;4 and
- additional consideration given by or for the nominee for the nomination.5
Additional consideration does not include genuine reimbursement of the deposit, legal costs or agent's commission already paid by the original purchaser. A nomination fee above the contract price, or a linked land and building arrangement, can qualify.6
For example, a purchaser signs a contract for a development site "and/or nominee", lodges a planning permit application for three townhouses, and then nominates a company as transferee. The lodgement is land development, it happened before the nomination, and duty can be assessed a second time on the transfer to the company.
What Counts as Land Development?
The definition is broad, and lodging an application is enough on its own. Land development includes:7
- preparing a plan of subdivision, or taking steps to have one registered;
- applying for or obtaining a planning permit, including an application that is refused;
- applying for or obtaining a building permit, or doing work that requires one;
- requesting an amendment to a planning scheme; and
- developing or changing the land in any other way that enhances its value.
The State Revenue Office's ruling on the meaning of land development, DA-064v2, sets out its current position.8
When is the Timing Safe?
The same act of development produces different duty outcomes depending on when it happens:9
| When the development occurs | Duty outcome |
|---|---|
| Before the contract date | Single duty |
| Between the contract date and the nomination | Double duty |
| After the nomination, before the transfer | Single duty |
The safe sequence is to nominate first and develop second. A purchaser who intends both to nominate and to seek permits should complete the nomination before any application is lodged.
Are There Exemptions?
Some transfers escape the second assessment. Relief can be available where the nominee is a relative of the original purchaser, where an ordinary duty exemption would apply to the transfer, and, since December 2023, under the corporate reconstruction provisions.10 Whether an exemption applies turns on the facts of the particular transaction.
What should Purchasers Check Before Nominating?
A nomination is a duty event, and four questions decide the risk:
- whether any planning or building application has been lodged, or any other land development has occurred, since the day of sale;
- whether the nominee or anyone connected with them is giving anything for the nomination beyond genuine reimbursement;
- whether the contract's own nomination conditions, often found in its special conditions and including any notice period, are being met; and
- whether an exemption, such as the relative exemption, could apply.
The Legal Practitioners' Liability Committee (LPLC), the professional indemnity insurer for Victorian solicitors, reports that almost all of the double duty claims it continues to see could have been avoided, and its practitioner flowchart Timing Is Everything to Avoid Double Duty maps the safe sequence step by step.11 If development plans and a nomination are both in prospect, you should obtain advice on the order of steps before anything is lodged.