SMSF - Does a bare trust help dodge land tax?

Hi All,

I have a comm. property owned by my SMSF in the name of a bare trust.

I'm considering buying another property in my SMSF with cash, so it will be in the name of the SMSF.

For land tax purposes, does the Office of State Revenue (Qld) recognise the bare trust as the actual owner of the commercial property, or the SMSF?
I'm hoping that because a title search shows the bare trust is the owner, if property #2 is owned by a different entity (the SMSF) then lnd tax will not be triggered, disregarding valuation thresholds etc.

Can anyone shed any light on this?

Many thanks

 

I don't know the answer without looking at the act, but it is usually the beneficiary that is assessed where the trustee is a bare trustee.

Get some legal advice to confirm

 

No. A bare trust means the smsf is land owner as beneficial owner. The custodian deed is required. The smsf is the one required to register and get one threshold

 

How about a NGUT with SMSF owning 100% of the shares? How does the threshold work in that scenario?

 

The trust would gets its own threshold in QLD. In NSW no threshold, but if the trust was a fixed unit trust the SMSF would be assesed as if it was owning the property.

 

When you use the term NGUT I will asssume you are referred to a ungeared unit trust (SIS Reg 13.22C / D) rather than a widely held geared unit trust. A (lesser) threshold applies to the trust in QLD. NSW would allow the trustee of that trust a threshold. Secondary assessment applies in NSW to the unitholder/s. Where a SMSF is the unitholder the SMSF would have the % of value applied to its own assessment (if it owns other land) and also give a % credit for the trustee tax already paid. This limits duplicated thresholds. That way a SMSF accesses ONE NSW land tax threshold.

While QLD trusts can be presently used to access multiple thresholds this is a unique matter for QLD land tax and there could (it has not been announced) change state laws to be more uniform with other states at any time and this could result in a major cost impact for some who adopted this solution. Note also that the stamp duty laws in QLD apply a far more difficult problem and changes to unitholders and parties to the trust can act as a stamp duty trigger in any future period. A common strategy for unit trusts is to change beneficial % ownership over time for example to increase the SMSF interest. This comes with a stamp duty concern in QLD unlike other states. Legal advice to understand these issues is imperative

Unit trusts dont issues "shares" but issues units as a fractional interest