The rights of a partner in a partnership have been highlighted again by the Court of Appeal of Victoria in a judgement handed down in December 2017 (Commissioner of State Revenue v Danvest Pty Ltd BC 201711304).
The case involved one of the partners buying out two other partners. The partnership was based on a unit partnership agreement, which effectively allocates the percentage of ownership between the partners based on the amount of the notional units held.
The court confirmed that the interest of a partner at general law was not a normal equitable interest in the property of the partnership but a beneficial interest of a special and non-specific kind relating to an equitable chose in action.
This right or chose in action consists of an equitable right to a proportion of the surplus after the realisation of the assets and payment of the debts and labilities of the partnership. It does not consist of any title to partnership assets prior to dissolution of the partnership.
The immediate effect of this case was to confirm that the State Revenue Office of Victoria has no current right to levy duty on the transfer of equity in a land owning partnership. This is proposed to be changed by legislation on 1 July 2018 by an Amendment to the Duties Act.
However it should also be the same for the entry of partners in a land owning partnership and should extend to also partners leaving such a partnership as the law is the same.
Note that this will apply to all partnerships and not just unit partnerships.
If you have been incorrectly assessed on any transfer of land due to changes in the partnership interests and paid duty you may be entitled to a refund of the duty if you act promptly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
