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Legal Tip 92: Transfer of Units in a unit Trust holding QLD real property

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

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Transfer of Units in a unit Trust holding QLD real property

    If someone holds units in a trust which holds real property in QLD and the units are transferred the transferee (recipient) of the units will pay stamp duty on the unencumbered value or the units or the purchase price whichever is higher.

    This applies also to a trust which has entered a contract but not settled on the purchase. Any restructuring needs to be done before contracts are entered into or duty will be payable twice - once on the transfer of land and once on the transfer of units.

    Duty is also payable on a surrender of units. If the trustee were to redeem units of the trust for example the duty would be payable on the value of the units.

    Example

    Tom sets up a unit trust with a company as trustee and Tom as the unit holder. The trustee company enters into a contract on Saturday to purchase a property for $1million. It is an auction so contracts are unconditional. On Monday Tom seeks advice from his tax agent and decides it would be better for the units to be owned by a discretionary trust. Tom causes the units to be transferred to the trustee of a discretionary trust on Tuesday. The trustee settles on the purchase a month later.

    There will be 2 lots of stamp duty to pay. Duty by the trustee of the unit trust on the transfer of land at $1mil and duty by the trustee of the discretionary trust on the transfer of units at $1mil.


    Legislation
    Section 9 (1)(i) Duties Act QLD http://www5.austlii.edu.au/au/legis/qld/consol_act/da200193/s9.html

    Section 55 http://www5.austlii.edu.au/au/legis/qld/consol_act/da200193/s55.html

    Section 56 http://www5.austlii.edu.au/au/legis/qld/consol_act/da200193/s56.html
     
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  2. Greyghost

    Greyghost Well-Known Member

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    Interesting Terry!
    Being in Vic I did not know this!
    Notes taken!!
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    QLD indirect duties rules are very tough. Take care with changes to a trust deed. An amendment that changes disc trust control (ie changing appointor) can trigger transfer duty !! Its the only state.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I am not sure changing appointor of a trust will trigger duty.

    A trust acquisition will where a trust owns QLD property and a taker in default of appointment is changed to someone outside the family.