Legal Tip 54: Stamp Duty Transferring a property from a trustee to a Beneficiary in WA

Stamp Duty Transferring a property from a trustee to a Beneficiary in WA


The WA duties act allows a trustee of a discretionary trust to transfer property to a beneficiary of the trust with nominal stamp duty under limited circumstances. For the conditions see s115
http://www5.austlii.edu.au/au/legis/wa/consol_act/da200893/s115.html



However, this is only possible where there is no consideration. This will cause problems where there has been money borrowed to acquire that property as it will result in the interest on any new loan to become non deductible. This is because the new loan will not relate to the acquisition of the property.


But s 115 can still be used as a strategy to get property out of a trust where necessary and minimise costs. Make sure you seek confirmation upfront that the Commissioner will not treat this as a market transfer. CGT will still apply.

 

This is actually very cool. We're living in a property that we bought in a trust and like it more than we intended too - it would be great to get it out of the trust.

There is a loan on it, but if it's a PPOR it's not deductible anyways. Would that work Terry? What does it mean by no consideration?

 

A gift basically.

 

Okay. What about if the trust is a unit trust? guessing it won't work in that instance?

 

Does the trustee have the power to distribute capital to the unit holders? It could still work, but s115 only applies to discretionary trusts. s29 may apply in this instance
DUTIES ACT 2008 - SECT 29

 

Thanks Terry. We have other property in the trust so may not work in our case.

 

Ah - you should only buy one property per unit trust for such reasons - and 4 others which may deserve another legal tip in the future.

 

There is a way to end the trust and avoid consideration and vesting. It requires that the sole trust beneficiary and the trustee are the same person. Definitely one for seeking legal advice to avoid any issues.

 

Terry_w in your old post above, the transfer for nominal duty in WA is only possible where there is no consideration. Does this mean when the beneficiary sells the property at some time in the future his/her cost base on acquisition will be $0 so the full sale value (less nom costs) will be subject to CGT?

 

no, as market value substitution rule would apply

 

This might cover that:

Tax Tip 153: CGT on Gifts and Under-market Value Transfers Tax Tip 153: CGT on Gifts and Under-market Value Transfers