New duty exemption in Qld for limited recourse borrowing arrangements on transfer from bare trust to SMSF

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Cooper Grace Ward

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Established in 1980, Cooper Grace Ward is a leading independent law firm in Brisbane with over 20 partners and 200 team members. They offer a wide range of commercial legal services with a focus on corporate, commercial, property, litigation, insurance, tax, and family law. Their specialized team works across various industries, providing exceptional client service and fostering a strong team culture.
SMSF trustees should be aware of a new duty exemption in Qld for property transfers from a custodian to the trustee.
Australia Finance and Banking

Self-managed superannuation fund (SMSF) trustees and their advisers should be aware that there is a new duty exemption in Queensland for property transfers from a custodian (bare trustee) to the SMSF trustee. While the amendment is recent, it applies retrospectively from 26 October 2011.

Under the new exemption, a transfer from the custodian to the SMSF trustee is exempt from duty if the property is held on trust in compliance with section 67A(1)(b) of the Superannuation Industry (Supervision) Act 1993 (Cth). The exemption is not available if the transfer is part of an arrangement where the property ceases to be held as fund property or there is a change in the interest of the fund members.

This reinforces that:

  • it is crucial for SMSF trustees to get their documents right from the very outset and ensure they comply with section 67A(1)(b); and
  • SMSF trustees should ensure the documents are kept in a safe place as they will need to produce these documents to the Commissioner when they have repaid the loan and are transferring the property from the custodian.

Given the ATO's view that once the borrowing is paid out, the custodian must transfer the property from the custodian to the SMSF trustee, this new exemption provides some comfort for SMSF trustees and their advisers. Previously, trustees had to make a detailed submission to the Office of State Revenue to obtain a discretionary exemption and otherwise were liable for full transfer duty.

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