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Multiple Trust in QLD to avoid land tax

Discussion in 'Accounting & Tax' started by TimC, 22nd Jul, 2015.

  1. TimC

    TimC Member

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    Hi,

    I have read @See Change 's great post on somersoft.
    My family trust currently have 1 IP in QLD, now looking to buy 2nd IP in QLD. To avoid land tax, I plan to set up a new family trust for the purchase.

    I live in Sydney, to stamp a family trust deed here cost $500, but it's free in QLD. Just wondering if it is possible/legal for NSW resident to set up a family trust and stamp in QLD? (Not sure if it is required to stamp in QLD)

    And can I use the same trustee company for multiple family trust? It will save set up cost. But would like to know the PROS and CONS. Will that cause problem for land tax and CGT etc?

    Thanks a lot.

    Tim
     
  2. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Hi Tim
    Very common to do so in QLD.

    If you use the same trustee and the beneficiaries are the same then it can be aggregated and you pay land tax as if in the one. it can also be an accounting and legal nightmare if something goes bad in one trust.

    No stamping in QLD at all, only have to provide a certified copy of the deed if you declare the trust when purchasing property.

    Setup loads of QLD trusts for my NSW clients, not an issue if buying property here.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Possibly could cause problems depending on the terms of the trust because the trusts can be aggregated.
     
  5. CU@THETOP

    CU@THETOP Well-Known Member

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    Multiple trusts with separate classes of beneficiaries?
    Also perhaps multiple trustees?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes there are many ways around it. I can't get the land tax act QLD up at the moment, but from memory there is a trap for trust with same trustees and beneficiaries and beneficiaries is defined to include those in whose benefit power has been exercised.
     
  7. WilliamB

    WilliamB Well-Known Member

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    There may be a cheaper way to do it, but based receipt of land tax over the last couple of years, our method isolates properties in the eyes of the OSR QLD, that being:

    Property 1 held in A Pty Ltd ATF A Trust
    Property 2 held in B Pty Ltd ATF B Trust
    Property 3 held in C Pty Ltd ATF C Trust

    Obviously this does not constitute legal advice, and I'm sure there are other things to consider but purely from Land Tax perspective we know this works for us.
     
  8. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Simple and no aggregation issues.
     
  9. TimC

    TimC Member

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    Thanks a lot everyone.
    Does it matters if the company A, B and C have same directors and/or the Trust A, B and C have same beneficiaries?
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    TimC likes this.
  11. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The stamp duty on the deed issue has been raised by me with OSR NSW and its imperative that the Registered address for the Trustee company of each trust is in QLD and that the settlor is in QLD. If any doubt exists, it is the trustee company that may have penalties imposed for failing to pay duty. In some arrangements I have seen deeds stamped in more than one state.

    A well known company formation group tried a scheme a few years back where they allowed you to appoint their (interstate) company under POA to settle the deed rather than in NSW. OSR NSW saw it as a scheme to avoid duty.

    I have many clients who have had their structure advised + settled by Darryl. A good idea IMO if buying QLD property in a trust.

    That said, the recent lender policy changes following APRA tighter rules are making it increasingly difficult for a trust to get lending approvals and there can be some impacts on accessing equity release for say Trust 1 to Trust 2 etc later since bank will ONLY lend to the trustee company. Equity release from Trust 1 across to Trust 2 poses a problem. If anyone is contemplating a trust I would strongly recommend a discussion with a broker familiar with the lenders and trust requirements before proceeding.

    Tip : Minor changes to trusts can avoid the grouping provisions. ie appointors, even a guardian (controller etc) may differentiate one trust from another.
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Interesting Paul.

    NSW Duties act s58 is the relevant section for duty on trust set ups in NSW
    http://www.austlii.edu.au/au/legis/nsw/consol_act/da199793/s58.html

    This has to be read against Chapter 11A - ss284C to 284J
    e.g. s284E
    Definitely where any party executing the deed is in NSW then NSW duty would apply.
     
  13. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    A settlor in QLD who settles the trust and executes the deed makes a declaration of trust in QLD. No mention of trustee. Trustees tend not to declare a trust with a DT. And in examples I have seen the settlor gives a cheque which is drawn on a QLD bank. Not NSW property. Trustee Co with reg office in QLD.

    The issue with using a POA in the earlier post was defeated as the POA was viewed as the declaration of trust not, the subsequent act of the attorney in the deed. (explained in my own words)
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The trustee will also execute the deed, so the location of the trustee is important for duty purposes too.