Transferring "Trustee" property

I have a property owned by a Trustee company as Trustee for both a SMSF & Discretionary Trust.

(I know they should ideally have two different Trustee companies, but for the moment they don't).

Now the SMSF wants to free up some cash by selling part of its share of the property to the Discretionary Trust.

I have 3 questions:

1. Am I correct in thinking there is no need to transfer the property, as it is still held by the same Trustee Company?
2.If there is no need to transfer, how should this be documented?
3. Is it a dutiable/CGT event?

Thanks,

 

Can smsf sell to related party outside super? Why would anyone set it up like this?

 

Business real property?

 

Imo first and foremost you need to work out who owns what, in the case of this particular property, what is listed on title, mortgage docs, any supporting info etc?

If the corporate trustee is listed but there has been no formally documented proof the company was acting as trustee for either your family trust or smsf or both, and what the split between the 2 is ownership wise, then you may find that the owner is the company.

If it is owned by either or both family trust and SMSF, then an important and very relevant distinction to make is that the owner is the trust/SMSF and not the trustee company

This could be a potentially pretty messy and expensive situation you're in...

How have you been paying for and allocating any expenses and income since purchase?

I'd strongly advise you pay for and receive knowledgeable and specific super and tax advice both re this situation and also prior to entering into further similar purchases as

 

Declaration of trust
Duitable event
Cgt event

 

It is land.

 

All income and expenses have been clearly documented as a 50:50 split, which reflects the ownership.

 

Thanks.

 

That doesn't answer the question. You need to get some advice on whether the trustee is permitted to 'acquire' it.

 

The transfer will be

XYZ Pty Ltd as trustee for the XYZ Discretionary Trust offers to purchase XXX from XYZ Pty Ltd as trustee for the XYZ SMSF

The presence of the one company acting for two trusts is messy - but the law behind the taxing points is unchanged.

Once you have done this get two companies and clean it up. I started out cheap with the same company but it was ugly and I paid the extra to fix it up.

 

Recording of trusts like this is prohibited in most states.
It couldn't happen like this because of the need for transfer documents to reflect the legal owner only because of Section 82(1) of the Real Property Act 1900 (NSW)

See
Legal Tip 170: Proving that a Property is held in Trust Legal Tip 170: Proving that a Property is held in Trust

 

I should point out that I am not a property lawyer and have no idea how this is effected in practice, but a person cannot contract with itself, even in different capacities so I suspect that a transfer cannot be used.

 

Gee I hope the existing ownership is as tenants in common
Otherwise wonder how the SMSF auditor sees it?

 

The one property owned by one person in two capacities!

wow

 

1. Yes, they can't buy from a related party though (unless BRP)
2. No idea ...

 

Yes the land department won't show legal ownership changing because it doesn't. You can lodge stuff with WA landgate if you are eager to show the trust relationship.

But you still need to transfer the property and the seller (the SMSF) still needs to be clearly articulated in the transfer and so does the buyer.

 

In QLD it can show, usually does show, but is not required to show as

as Trustee under intrument 7??????????

If the land is QLD if you pm me some more details I can have a look and revert through here without identifying information.

 

RPI how would a person 'transfer' a property to themselves as trustee in QLD. Would they do a transfer?

 

Often yes part 51 of of land titles practice manual (LTPM) deals with it (attached)

eg

you can do a Form 1 Transfer to the trustee were there is no trust deed [51-2030] LTPM

to transfer Form 1 trustee to another

otherwise a Form 14

interestingly the LTPM explicitly deals with the situation where a person is acting in a dual capacity (as in their own right and as a trustee) - you need to use separate forms

You could technically have ownership on title as

John Smith 40

John Smith 60

as tenants in common

which may also read as

John Smith 40

John Smith as trustee under instrument 7???????? 60

depending on how you did it.

 

Just because expenses and income have been declared a certain way doesn't automatically mean the ownership will be found to be the same. Sure maybe it might prove intent but i would definitely be wanting some independent advice on current legal status if i were u