Taxpayer wins appeal as Full Court finds Moon Lake just shy of land-rich threshold

On 7 October 2026, the Full Court of the Supreme Court of Tasmania (Shanahan CJ, Estcourt and Brett JJ) allowed the taxpayers’ appeal in Ningbo Kaixin Investment Co Ltd and Van Dairy (Hong Kong) Group Ltd v Commissioner of State Revenue [2026] TASFC 15 (Van Dairy Appeal), setting aside assessments of duty, penalty tax and interest totalling approximately A$20 million.

The assessments were issued by the Commissioner of State Revenue (Commissioner) under the previous “land-rich” provisions in Chapter 3 of the Duties Act 2001 (Tas) (Duties Act) following the taxpayers’ indirect acquisition of a major dairy property in north-west Tasmania (Woolnorth).

Key takeaways

The taxpayers were successful on only one of four grounds: the land-rich ratio. The Commissioner erred in the approach taken to valuing the target company’s non-land assets. This was enough for the taxpayers’ appeal to be successful because the target company was held not to be land-rich and therefore no duty was payable on the dealings in its shares. In this respect, the Full Court held that:
- a valuation of “like with like” was required so both land and non-land assets needed to be valued at the market value and the unpaid purchase price was ignored; and
- the land assets as a percentage of the target company’s assets were 59.007%, which was just short of the required 60% threshold to trigger duty.
Importantly, the Full Court affirmed the earlier decisions in this case that an agreement by a head company to procure that a wholly owned subsidiary transfer the subsidiary’s land was an agreement to transfer the land, even though the subsidiary (as vendor) was not a party to that agreement. This may have a range of impacts in both stamp duty and non-stamp duty contexts. For example:
- depending on the jurisdiction, a liability to multiple instances of duty can arise on share dealings in an entity that may be deemed to be a landholder before it has completed the underlying land sale agreement;
- duty may apply when a corporate entity controls subsidiaries, specifically where an entity arranges for subsidiaries to sell assets which is common in global business sale agreements involving parent companies;
- timing for lodgement and/or payment of income tax and indirect taxes can be brought forward; and
- other compliance obligations will need to be carefully navigated (e.g., FIRB, the foreign resident CGT withholding and GST withholding regimes).
The Full Court also affirmed that control does not equal beneficial ownership and that a technical deficiency in completing the relevant transfer documents did not, on the evidence, prevent a valid transfer of shares in the target company.

Background

Acquisition of Woolnorth

Woolnorth was owned by Van Dieman’s Land Company (VDL) and Tasman Ferndale Pty Ltd (TFPL), each a wholly owned subsidiary of Tasman Land Company (TLC). At that time, Mr Lu Xianfeng (Mr Lu), who at all relevant times controlled the taxpayers, sought to acquire Woolnorth and its related assets from the TLC group.

On 30 October 2015, Mr Lu incorporated Moon Lake Investments Pty Ltd (Moon Lake),^[1] of which he was the sole shareholder, to act as the purchasing vehicle for the proposed acquisition. The acquisition was then completed in a series of transactions:

on 20 November 2015, Moon Lake entered into a Sale and Purchase Agreement (SPA) with TLC, under which TLC agreed to procure the sale and transfer to Moon Lake of the ‘Assets’ (land and non-land) owned by VDL and TFPL for approximately A$275 million, with completion set for 31 March 2016;
on 12 January 2016, the Australian Securities and Investments Commission (ASIC) share register recorded the transfer of Mr Lu’s shares in Moon Lake to Ningbo Kaixin Investment Co Ltd (Ningbo) (the First Share Transfer);
on 24 March 2016, the ASIC share register recorded the transfer of Ningbo’s shares in Moon Lake to Van Dairy (Hong Kong) Group Ltd (VDHK) (the Second Share Transfer); and
on 31 March 2016, completion of the SPA took place and each of VDL and TFPL provided Moon Lake with a signed land transfer for the property.

Assessments, objections and appeals

On 4 April 2016, Moon Lake lodged the land transfers with the Tasmanian State Revenue Office (SRO) for assessment of stamp duty and paid estimated duty of approximately $8.2 million.

The SRO subsequently requested further information and, after five years, notified the taxpayers that it deemed Moon Lake to be a land-rich private company at the time of each acquisition and therefore, the First Share Transfer and the Second Share Transfer were separate dutiable transactions under the Duties Act.

On 5 July 2021, the Commissioner assessed Ningbo and VDHK as each liable to pay duty, interest and penalty tax of approximately $10.5 million and each taxpayer lodged a notice of objection.

The Commissioner disallowed the objections (but reduced the amount of each assessment) and both the Magistrates Court and the Supreme Court upheld the revised assessments.

The taxpayers then appealed to the Full Court.

The legislative context

This case was decided under the former land-rich provisions of the Duties Act (the land-rich ratio test was removed in 2017). Under the former provisions, a liability to duty would arise if Moon Lake had land holdings in Tasmania with an unencumbered value of $500,000 or more and its land holdings in all places, whether within or outside Australia, comprised 60% or more of the unencumbered value of all its property.

Regarding the above tests, the former (and current) provisions treat a company that is the purchaser under an uncompleted agreement for the sale of land as separately entitled to the whole of that land. An exemption applies if the person could have acquired the underlying land without a liability to ad valorem duty.

Grounds of appeal

The taxpayers argued that:

the SPA was not an agreement for the sale of land under the Duties Act;
Moon Lake was not at any time a land-rich private company;
there was no valid and effective transfer of shares from Mr Lu to Ningbo; and
there was no change in the beneficial ownership of the land.

A separate appeal by the Commissioner concerning the remission of interest was dealt with in companion reasons, Commissioner of State Revenue v Van Dairy (Hong Kong) Group Limited and Ningbo Kaixin Investment Co Ltd [2026] TASFC 16.

The Full Court’s decision

The Full Court allowed the appeal on ground 2 and dismissed the other three grounds. It decided all four grounds so that the remaining grounds would not need to be reheard if the High Court took a different view on ground 2.

Ground 1: The SPA was not an agreement for the sale of land (dismissed)

The taxpayers argued that TLC was not a “vendor” because it did not own the land. They also argued that the SPA was too uncertain as to price and subject matter, and that it did not satisfy the Statute of Frauds (s 36(1) of the Conveyancing and Law of Property Act 1884 (Tas)). The Court rejected all three arguments:

The Duties Act does not require the agreement to be with the landowner. TLC had bound itself to procure its wholly owned subsidiaries, VDL and TFPL, to transfer the land. It also warranted clear title and was to receive the purchase price. In any event, the Duties Act deems a company to hold its subsidiaries’ interests in land.
The relevant section is about whether an agreement exists, not whether it can be enforced, and the SPA was completed in any case. The price and subject matter were certain enough, even though the price was not split between VDL and TFPL.
Statute of Frauds. This Act affects only whether a contract can be enforced by action, not whether it is valid.

Ground 2: Moon Lake was not land-rich (upheld)

At both acquisition dates, Moon Lake’s only property was its entitlement under the SPA. The Commissioner counted the full value of the land but valued the non-land assets only as a right to sue for damages, capped at $10 million under the SPA’s claims limitation clause. That approach put the ratio well above 60%.

The Full Court found two errors with the Commissioner’s approach:

Wrong clause. The $10 million cap applied only to “non-title” warranties. Claims under the title warranties were capped at the full purchase price.
Wrong question. Following Commissioner of State Revenue v Placer Dome Inc [2018] HCA 59; 265 CLR 585, valuation must start from the statutory scheme. Here, the scheme asks whether a company’s value comes mainly from land. Because “unencumbered value” applies to both land and non-land property, both must be measured the same way: “apples must be compared with apples”.

On that basis, the Court held that the unpaid purchase price cannot be deducted from the non-land assets only. Doing so produced a “skewed and unrealistic” result, where a company would be land-rich before completion but not after.

On the agreed values, the ratio was 59.007%, so Moon Lake was not land-rich and no duty was payable.

Ground 3: The share transfer from Mr Lu was invalid (dismissed)

Mr Lu’s electronic signature had been applied by an employee at his secretary’s request. The Court treated the validity of the transfer as a question of fact, not law. In any case, the taxpayers’ own objection said Mr Lu had transferred the shares, and a taxpayer is confined to its grounds of objection.

Ground 4: No change in beneficial ownership (dismissed)

The taxpayers argued that Mr Lu’s ultimate control of all the entities meant a hypothetical direct transfer of the land would involve no change in beneficial ownership. On that view, the transfer would attract only $50 nominal duty, and the share acquisitions would be exempt. The Court rejected this argument for three reasons:

Under the separate entity doctrine, Moon Lake owned its deemed interest in the land, not its shareholders.
Shareholders cannot rely on the corporate shield and also claim their shares amount to beneficial ownership of the company’s land.
“Beneficial ownership” in the section has its ordinary meaning and does not extend to economic control.

The Court did reject the lower courts’ view that the relevant section can never apply to a Chapter 3 liability.

Significance of the Van Dairy Appeal

The land-rich ratio was replaced in 2017 by the “landholder” provisions, which have no ratio test. However, the Court’s reasoning on unencumbered value, beneficial ownership and validity of transfers should still apply.
Procurement arrangements should be drafted with this decision in mind. It does not bind courts in other jurisdictions, but as an appellate decision it may be influential.