Family Unit Trust for NSW Land Tax Threshold

Discussion in 'Legal Issues' started by Tom Chen, 17th Mar, 2021.

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  1. Tom Chen

    Tom Chen Member

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    Hi All,

    I'm a newbie in this forum. I got a question and wonder whether someone can help me on this.

    Land Tax NSW says that "A family unit trusts receives the land tax threshold" with these conditions "95 per cent or more of the units are owned by the same family group.". But my lawyer told me that family unit trust can't be owned by a single family for the purpose of Land Tax Threshold.

    I'm confused. I can't find clause Schedule 1AA (2) of the Land Tax Management Act 1956) as “Family unit trust has the meaning given by Schedule 1AA (2) of the Land Tax Management Act 1956).”

    My question is what exactly a family unit trust is? If I want to buy a property in NSW, and can I set up a family unit trust just for my family, i.e my wife owns 50% units and I own 50% of the unit?

    Thanks,
    Tom Chen
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    This "grandfathered" provision back in 2005 was given to trusts AT THAT TIME to permit a older style unit trust to adopt a threshold much like the more recent "fixed unit trust" can. You cant now use it and care should be taken to avoid a duty trigger in some instances if you change unitholdings.

    You cannot estblish a trust now and access the family unit trust concession. I believe that is what the soliictor should have advised. You should be considering a fixed unit trust. And understanding the benefits of a fixed unit trust with 50% units each v buying TIC in equal shares should be understood. There may be additional costs and no tangible benefit to use of a unit trust.

    Of course, the unitholders will each also be assessed with secondary land tax assessment.
     
  4. Tom Chen

    Tom Chen Member

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    Thank you both. So, the simple answer should be No. Then the holding cost will be pretty high, for a 2 m land, the land tax will be $32K per year.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Seek legal advice on how to minimise the land tax - and the other consequences which flow from this.
    e.g. sole name
    joint name
    company
    fixed unit trust with
    -single individual unit holder,
    -with 2 unit holders,
    -with a company as unit holder
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    smsfs. Partnership of trusts or smsfs and more