JV Partnership and In specie Distribution

Jv incorporated in Vic – running the development project.

4 trusts set up in Vic in JV partnership

Developed 7 Th’s out of which 3 are sold and the partners are planning to hold the remaining 4 .

All 4 Th’s are similar size and similar $.

Can these TH’s be distributed to individual trusts as in specie distribution?

When there is an In specie distribution, is there stamp duty on the transfer?

Can all 4 trusts have a partition agreement in place for all 4 Th’s based on the planning permit and plan of subdivision?

Gst consequences: Intention of all trusts is to hold on the Th’s as investment property, Do they have to apportion the GST and refund it back to ATO?

Although the individual owners plan to hold on the TH for 5 years – does the GST need to be repaid to ATO?

 

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JV Partnership and in specie distribution

 

There most likely is a taxable supply to the final owner of the property. Partitions are a GST supply in any event. It would be sensible to et legal advice on the partition and at the same toime ensure that the partitions are correctly addressed for tax purposes.

Assuming that the supply to the 4 trust owners is a taxable supply then there should be no concerns with the creditable nature of the GST incurred. The main issues with a partition in this type of transaction is cashflow.

• The trusts that acquire will incur GST on the market value of their property
• The financing of the GST needs to be considered esp regarding tax deductions etc