This final part of our 3 part series on the decision of Razzy Australia Pty Ltd & Anor v Commissioner of State Revenue [2021] VSC 124 looks at the requirement under the super fund to super fund duty exemption (as contained in section 40 of the Duties Act 2000 (Vic) (Act)) that a person ceases to be a member of a complying superannuation fund ‘in connection with’ the transfer of dutiable assets between the super funds. Part 1 of our series examined whether the exempt transfers are aggregated for landholder duty. While Part 2 considered whether the super fund to super fund exemption applies to the redemption of units.
Transfers ‘in connection with’ ceasing to be a member of a complying superannuation fund
As part of the restructure described in Part 1 of our series, various transactions occurred over a period of time to effect the transfer of membership balances between the various super funds.
The Victorian Supreme Court determined that the meaning of the word ‘connection’ is both wide and imprecise and its exact ambit will depend on the statutory context.
In the context of the factual circumstances in this case, the Court highlighted that the requisite connection must be between the notional transfer, here being the redemption of units and, the person ceasing to be a member of one fund while becoming entitled to benefits in respect of the fund to which the dutiable property is transferred to.
Contrary to the Commissioner’s contentions that there was no connection, the Court held that the requisite connection existed for the following reasons:
A precise matching between funds redeemed and funds rolled over is not required.
The rollover of cash and redemption of units are related to the purpose of achieving the stated objectives in the settlement deed.
The separation of events by short time intervals do not detract from the requisite degree of connection being made out.
The existence of a non-exempt transaction within the overall scheme of transactions effected requires separate consideration and attracts duty, but it is not relevant to whether the ‘connection’ requirement is satisfied in section 40(1)(c) of the Act.
This a welcome finding by the Supreme Court, as super fund to super fund transfers as a result of a rollovers can involve a number of “moving parts” and it can be difficult to ensure the transfer of all assets and member entitlements occur at once. This finding gives super fund trustees some comfort that the exemption will apply even if there is some delay with the relevant member ceasing to hold benefits in the transferor super fund.
To discuss or for further information please contact:
Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au
Thomas Abraham
Senior Assoicate
M +61 3 9611 0139 | T +61 438 401 853
E tabraham@sladen.com.au
