The Duties Act 1997 (NSW) sets out instances where a concessional or nominal amount of duty is payable on the transfer of property.
Section 54(3) of the Duties Act 1997 (NSW) is an example of such a provision and states as follows:
“(3) Duty of $50 is chargeable in respect of a transfer of dutiable trust property to a person (other than to a licensed trustee company, a special trustee, a trustee of a self managed superannuation fund or a trustee of a special disability trust) as a consequence of the retirement of a trustee or the appointment of a new trustee if the Chief Commissioner is satisfied that, as the case may be:
- none of the continuing trustees remaining after the retirement of a trustee is or can become a beneficiary under the trust, and
- none of the trustees of the trust after the appointment of a new trustee is or can become a beneficiary under the trust, and
- the transfer is not part of a scheme to avoid duty that involves conferring an interest, in relation to the dutiable trust property, on a new trustee or any other person (whether or not as a beneficiary) so as to cause any person to cease holding the whole or any part of a beneficial interest (or potential beneficial interest) in that property.
Accordingly, duty of fifty dollars ($50) is payable where there has been a change of trustees in a trust. However, the payment of this nominal amount of duty is subject to the Chief Commissioner being satisfied of certain requirements such as none of the continuing or new trustees being, or being allowed to become, a beneficiary under the trust.
In that regard, Revenue Ruling No DUT 037 issued by Revenue NSW specifies that the Chief Commissioner will be satisfied that none of the continuing or new trustees, after the retirement of a trustee is, or can, become a beneficiary under the trust if:
- the trust deed provides that the continuing or new trustee is prohibited from being, or becoming, a beneficiary under the trust; and
- this prohibition is irrevocable.
If the trust deed does not contain a provision which expressly prohibits a continuing or new trustee from being a beneficiary under the trust, then full duty may be charged on any transfer of dutiable trust property.
If you require assistance with reviewing your trust deed or amending your trust deed to include a provision with respect to the above, contact our business specialist, Justin Thornton at jthornton@marsdens.net.au or on (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
