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Bare Trust For SMSF Purchase

Discussion in 'Legal Issues' started by JK200SX, 22nd Oct, 2015.

  1. JK200SX

    JK200SX Well-Known Member

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    Melbourne
    Confused about this topic and hope some of you can provide some information on this topic.

    1. The Bare Trust is a legal document most likely drawn up by a legal professional?
    2. I presume the wording should be standard for all bare trusts used to purchase say residential property in an SMSF?
    3. When the document is drawn up and paid for is the document registered to show that it was drawn up at that time?
    4. I've heard that stamp duty is payable on the establishment of the bare trust (in this case Vic). Is this correct.

    That's enough for now, I'll wait for some answers before posting more questions.

    Thanks!
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Sydney
    1. A bare trust is a relationship - evidenced by a deed drawn up by a lawyer
    2. Why presume? There are many different varieties with different wording.
    3. No
    4. not sure on VIC.

    But you don't want a bare trust for a superfund, you need a custodian trust which is different.
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Location:
    Sydney
    Each state adopts different stamp duty rules on a SMSF bare trust. Most states have adopted a uniform code which ensures that the bare trust deed is stamped at the time of title being registered that recognises the Limited Recourse Borrowing Facility under SISA and this later allows a concession for duty to enable the SMSF asset to transfer from the custodian trustee to the SMSF Trustee when the loan is paid. This process is not unlike the apparent purchaser concessions. OSR will stamp the deed. This is also an important legal matter should the property come before a court.

    Transfer duty is not paid in that instance. However a concessional rate of duty (Nominal Duty) is charged...NSW its govered by : http://www.osr.nsw.gov.au/info/legislation/rulings/duties/dut041 Vic does not charge any.

    Definitely an area for legal advice and handholding to avoid a "Whiterock" stamp duty problem