Nomination Risk in Victoria: How Buyers End Up Paying Double Duty

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Nomination Risk in Victoria: Timing Is Everything

When purchasing property in Victoria, nomination clauses are often treated as a convenient tool.

Buy in your own name, then later nominate a company, trust, or SMSF to take over the contract.

On paper, it looks straightforward.

In practice, this is one of the easiest ways to accidentally trigger double stamp duty under the Duties Act 2000 (Vic).

What Is a Nomination Clause?

A nomination clause allows the purchaser named in the contract to transfer their interest to another party before settlement.

This is commonly used where:

  • A buyer has not finalised their structure

  • A trust or SMSF is being established

  • Finance or tax advice is still pending

The assumption is that the nominee simply “steps into the shoes” of the original purchaser.

That assumption is where the risk begins.

Where It Goes Wrong

The issue is not the nomination itself.

The issue is when and how it is done.

Under the Duties Act 2000 (Vic), particularly in relation to sub-sales and subsequent transactions, a nomination can be treated as a second dutiable transaction if:

  • There is any additional consideration passing between the parties

  • The nomination occurs after a separate arrangement has been formed

  • The original purchaser is seen to have acquired a beneficial interest before transferring it

In simple terms, if the State Revenue Office considers that the first purchaser “owned” the deal, even briefly, and then passed it on, duty can apply twice.

A Common Scenario

A buyer signs a contract in their personal name.

A week later, after speaking with their accountant, they decide the property should be purchased in a trust.

They nominate the trustee company.

What they do not realise is that:

  • The first contract may already be a completed dutiable transaction

  • The nomination may be treated as a second transaction

  • Duty may be assessed on both

This is not theoretical. It happens regularly, and the amounts involved can be substantial.

Timing Is Everything

The key issue is whether the nomination forms part of the original arrangement, or whether it is seen as a separate transaction.

To minimise risk:

  • The correct purchasing entity should be identified before signing

  • Any nomination should be clearly contemplated within the contract terms

  • There should be no separate agreement or consideration passing after signing

Once the contract is signed incorrectly, options become limited.

SMSF and Trust Purchases

This risk is particularly relevant where buyers intend to purchase through:

  • Self Managed Super Funds

  • Discretionary or unit trusts

  • Corporate structures

These structures often take time to establish.

That delay is exactly what creates the exposure.

Why This Matters More Now

The State Revenue Office Victoria has taken an increasingly strict approach to:

  • Sub-sales

  • Land development arrangements

  • Nomination structures

What may have slipped through years ago is now being actively assessed.

How to Get It Right

The safest approach is simple:

Get the structure right before signing the contract.

If there is any uncertainty:

  • Do not sign in your personal name “for now”

  • Do not rely on fixing it later

  • Do not assume a nomination will be neutral

Because once the contract is signed, the position is largely locked in.

A Practical Approach

As explained by David Dawn, Licensed Conveyancer at Victorian Property Settlements, most nomination problems arise from last-minute decisions after a contract is already signed.

The better approach is to slow down at the start.

Confirm:

  • Who is buying

  • In what capacity

  • With what structure

Then proceed.

Final Word

Nomination clauses are not a safety net.

They are a technical mechanism that must be used correctly, or they create risk instead of flexibility.

Getting it wrong can mean paying duty twice on the same property.

That is a mistake that is entirely avoidable with the right advice at the outset.

If you are unsure how to structure your purchase, or you are considering using a nomination clause, speak with us before signing anything.

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.
Visit: https://www.victorianpropertysettlements.com.au