Since 1 July this year, full stamp duty has been payable on the
death or retirement of an existing trustee and appointment of a new
trustee to a self-managed super fund (SMSF), if
the remaining or new trustee is a beneficiary and the fund owns
To avoid unnecessary duty implications under the new regime,
legal advisers would do well to encourage clients to have all SMSFs
reviewed with a view to appointing a corporate trustee and
including a non-revocable clause precluding the corporate trustee
from becoming a beneficiary.
The State Revenue Legislation Amendment Act 2010
(SRLA Act), which came into effect on 1 July 2010,
amended the definition of "special trustee" in s.54 of
the Duties Act, so a special trustee must now fall within the
definition of a trustee of a complying superannuation fund as
defined in s.42 of the Superannuation Industry (Supervision)
An entity is a complying fund in relation to a year of income if
it was not a SMSF at any time during that year. The effect of the
amendment is that the trustee of a SMSF is no longer defined as a
special trustee for the purposes of s.54(2) of the Duties
Act, which provides for nominal duty on a transfer of dutiable
property between special trustees.
To apply for nominal duty, we must now rely on s.54(3) of the
Duties Act, which provides that duty of only $50 is
payable on the change of a trustee, if three conditions are
none of the continuing trustees remain and can become a
beneficiary of the trust;
the new trustee cannot become a beneficiary of the trust;
the transfer is not part of a scheme for conferring an interest
in relation to the trust property on a new trustee or any other
person to the detriment of any beneficiary
If any of these three requirements cannot be met, full duty is
paid on the transfer.
Each SMSF must have a minimum of two individual trustees at any
time. Many individuals who are beneficiaries of an SMSF have
themselves appointed as trustees, and it is common for a married
couple to act as trustees in a two-member fund.
The effect of the SRLA Act is that on the death of one of the
trustees, full stamp duty will be payable on the appointment of a
new trustee if the remaining or new trustee is a beneficiary under
the SMSF and the fund owns dutiable property.
Dutiable property is defined in s.11 of the Duties Act
and includes land, business assets, units in a unit trust scheme
and shares in a NSW company.
To be able to meet the requirements of s.54(3) of the Duties
Act, all new SMSFs should now have a corporate trustee and be
drafted to include a non-revocable clause precluding the corporate
trustee from becoming a beneficiary.
On the retirement or death of a trustee of an existing SMSF, the
transfer to a new trustee will not be liable for full duty if the
remaining trustee retires and a new corporate trustee is appointed.
In such an event, the existing SMSF would need to be amended to
include a non-revocable clause precluding the corporate trustee
from becoming a beneficiary.
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