Proper drafting of legal documents can be especially
important in a stamp duty context as inappropriate drafting can
result in an unexpected stamp duty cost. This is illustrated by a
case that was decided in New South Wales last year. The Chief
Commissioner succeeded in extracting two lots of stamp duty from
the taxpayer in respect of an arrangement that involved only one
lot of dutiable property. Double duty might not have arisen had the
relevant document been drafted differently.
AL-SAEED AND ASSOCIATION PTY LTD ATF AL-SAEED EDUCATION AND
WELFARE TRUST V CHIEF COMMISSIONER OF STATE REVENUE
In Al-Saeed and Association Pty Ltd ATF Al-Saeed Education
and Welfare Trust v Chief Commissioner of State
Revenue,1 a charitable trust was established for
the advancement of public education and welfare.
The initial trust property of the Al-Saeed Educational and
Welfare Trust was the settlement sum of $100. The trust deed also
contained the following recital:
The trustee wishes to acquire a property on behalf of
the Trust located at 1492 Camden Valley Way, Leppington NSW Auto
The day after executing the trust deed, the trustee entered into
the contract for the purchase of the property. The purchaser was
described in the contract as "Al-Saeed & Associates Pty
Ltd atf Al-Saeed Educational and Welfare Trust".
Transfer duty was assessed and paid on the contract. However,
the Chief Commissioner also issued an assessment notice in respect
of the trust deed and imposed the same amount of duty on the
This stamp duty outcome might seem surprising given that the
case merely involved the establishment of a trust and the trustee
acquiring property for the trust. There was only one acquisition of
property and yet two lots of stamp duty were payable.
Double duty arose because, in New South Wales as well as in most
other States and Territories, a declaration of trust is a
separately dutiable transaction. Accordingly, an arrangement that
involves a declaration of trust over dutiable property as well as
an agreement to purchase dutiable property will give rise to two
In the present case, the Administrative Decisions Tribunal
confirmed the Chief Commissioner's assessment of duty on the
trust deed on the basis that the recital was a dutiable declaration
of trust over the property.
This is an unfortunate result given that the taxpayer is the
trustee of a charitable trust. But it is even more unfortunate
considering that the outcome could have been prevented through
appropriate drafting of the trust deed.
Specifically, it was arguably unnecessary to include the
particular recital in the trust deed since the trust deed already
contained a declaration by the trustee that they would "hold
the settlement sum and all monies and property both real and
personal which may hereafter be given to the Trust...upon
trust...". In addition, the contract for the purchase of the
property made clear that the trustee was purchasing the property in
their capacity as trustee such that the property would become an
addition to the existing trust property. In these circumstances, it
seems that the recital was superfluous...and costly.
Even without the recital, the trust deed was dutiable because it
was an instrument that declared a trust over New South Wales
property, being the settlement sum of $100. However, as the
settlement sum was not dutiable property, the trust deed would have
only attracted fixed duty of $500 (in the absence of the
IMPLICATIONS OF THE DECISION
This case highlights the importance of drafting a trust deed
carefully so as to prevent making any unnecessary or inadvertent
declarations of trust over dutiable property. However, the dangers
do not end there.
Another potential area of risk which was touched on in the case
is where a reference to an existing trust in a transaction document
results in a "fresh" declaration of trust which might
again attract ad valorem stamp duty. The risk exists even if the
declaration is merely an acknowledgement or confirmation of the
existing trust, and no new trust or interest in property is
1 NSWADT 155.
2An instrument that declares a trust over
property that is not identified in the instrument is also subject
to fixed duty of $500 in New South Wales.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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