selling a discretionary trust?

Hi,


I have a trust that holds several properties some still under constructions, and the trustee is a company with me as the sole director.
I am wondering if it is possible and/or legal to "sell the trust" by selling the company?

 

Not as such if its a discretionary trust. There are many legal impediment since the deed wont grant another party any beneficial interest so to change the deed may poses loads of issues. Trust resettlement would almost certainly occur and trigger duty and CGT. The CGT event may be that of the loss of beneficial interest rather than sale of property since the trustee may remain legal onwer. Land rich rules also may address this.

A unit trust in SOME states can effect a transfer however it can also trigger duty. Land rich and other rules (esp in QLD !!) can also impose duty sometimes to the buyer. Units should NOT be transferred as that is almost certainly a trigger for stamp duty. CGT still applies. Complex problems may arise with the trust but these may be addressed. Or totally made worse by poor accounting knowledge and support.

Seek legal advice from a proficient duties specialist. It sounds like a scheme to defraud the Commissioner of Revenue from stamp duty too. So even if it seemed permitted it may be caught by the fraud provisions

Given the property is under construct you could also trigger a major error with GST. The changes may be a taxable supply. Reference above to CGT may then also be ignored and assume ordinary income tax is possibly realised. It sounds and looks like a sale of property from XYZ Pty Ltd for one trust to XYZ Pty Ltd as trustee for another trust. The settled sum would be market value on that transfer. Plus penalties.

 

I would imagine the trustee has nothing to do with the company sale, as a trust is not a legal entity but an arrangement(according to my accountant), perhaps @Terry_w or @Paul@PAS would be the best people to ask.

 

To sell something you must first own it. You might control a discretionary trust but you don’t have any interest in the assets of the trust. You can pass control of the trust to someone else but lots to consider. If you receive payment for this it would be a CGT event. The new person would probably want to be a beneficiary so the deed might need to be changed to reflect this and cgt has to be considered again for this as well as stamp duty for each state the trustee holds assets in

 

Thanks Paul and Terry, your advices are really informative. So the tax and penalties potentially involved are mostly CGT right? do you have any business contact I could ring? happy to pay for any consulting expenses required

 

Why would you want a business contact? you need to speak to a lawyer. Have you got a buyer lined up and are they related. It is possible to avoid tax completely depending on the circumstances, but the advice would be costly - in the thousands.

 

Night Owl Terry? I think OP will find the advice is worth it if you can avoid tax completely.

 

I am in Thailand now, is only 11.30pm

Op where does the trustee hold property?

 

I don't plan to avoid any tax, I'll pay all the CGT tax needed to be paid. The properties are in queensland. Ok thanks I'll find a property lawyer, should I find one in my local area, or in QLD?

 

Try https://www.bpladvisory.com.au/

 

Thanks Terry, appreciate your help