Family farm exemption

Unless stated otherwise, all section numbers are references to the Duties Act 2000.

Family farm exemption (section 56)

The family farm exemption may apply to a transfer of dutiable property which is an estate in fee-simple, a life estate, or an estate in remainder in primary production land.

In general terms, the family farm exemption permits farms to be transferred to relatives, family companies or trusts without incurring duty. The transferor must be a natural person, company or trustee within certain defined categories and the transferee must be a natural person or a trustee within certain defined categories.

The Commissioner of State Revenue must also be satisfied that the transfer does not arise from arrangements or a scheme devised for the principal purpose of taking advantage of the exemption.

Primary production (section 3)

Primary production is the use of land primarily for:

• Cultivation for the purpose of selling the produce from it (whether in a natural, processed or converted state). 
• The maintenance of animals or poultry for the purpose of selling them, their natural increase or bodily produce.
• The keeping of bees for the purpose of selling their honey.
• Commercial fishing, including the preparation for commercial fishing or storing or preserving fish or fishing gear. 
• The cultivation or propagation for sale of plants, seedlings, mushrooms or orchids.

Primary production land (sections 65, 66 and 67 of the Land Tax Act 2005)

Primary production land is:

• Section 65 - land outside greater Melbourne that is used primarily for primary production.
• Section 66 - land comprising one parcel that is:
  • wholly or partly within greater Melbourne but not within an urban zone, and
  • used primarily for primary production, or
• Section 67 - land comprising one parcel that is:
  • wholly or partly within greater Melbourne and also within an urban zone, and
  • used solely or primarily for the business of primary production, and
  • the owner of the land is a person specified in section 67(2) of the Land Tax Act 2005.

‘Greater Melbourne’ has the same meaning as ‘metropolitan area’ as defined in section 201 of the Melbourne Metropolitan Board of Works Act 1958. 'Urban zone' means a zone under a planning scheme in force under the Planning and Environment Act 1987. If you are unsure whether property is within greater Melbourne or an urban zone, please contact the municipality in which the property is located.

Relative (section 3)

Relative means a natural person and:

1. A child or any lineal descendant of the person or of the partner of the person,
2. A parent or any lineal ancestor of the person or of the partner of the person,
3. A brother or sister of the person or of the partner of the person,
4. The partner of the person or a partner of any person referred to in (a), (b) or (c) above,
5. A child of a brother or sister of the person or of the partner of the person,
6. A brother or sister of a parent of the person or of a parent of the partner of the person.

The transferor (section 56(2))

In order for the family farm exemption to apply, the transferor must be a:

1. natural person, or
2. trustee for a natural person, or
3. company(not acting in the capacity of trustee under a trust) all the shares in which are owned by natural persons who are relatives of each other, or
4. trustee under a discretionary trust, the capital beneficiaries of which are limited to natural persons who are relatives of each other, or
5. trustee under a fixed trust, the beneficiaries of which are limited to natural persons who are relatives of each other.