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

Discussion in 'Legal Issues' started by Terry_w, 11th Aug, 2015.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    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?
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    A gift basically.
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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
     
  6. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
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  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    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.
     
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