A Matter of Trusts

Taxation in Australia Journal

This article provides tips and traps around accessing land transfer duty exemptions for the transfer of Victorian real estate from a trust to a beneficiary.

Introduction

There may come a time in a trust’s life cycle when the trustee may want, or need, to take real property out of the trust. There may be a number of reasons for this, such as succession planning, exiting a family group, divorce and/or tax reasons. Many things must be considered before real property is transferred out of a trust, including capital gains tax, GST, transfer (stamp) duty, provisions of the trust deed, fiduciary duties etc. An important consideration is whether or not transfer duty will be triggered on the transfer. In particular, whether an exemption may apply and therefore the real property can be transferred duty-free. This article examines the ability to transfer Victorian real property duty-free from a trust (including from a discretionary trust, a unit trust, a fixed trust, a self-managed superannuation fund etc) to a beneficiary (including a natural person, a trustee of another trust etc). In particular, the article considers key practical tips and traps to look out for when applying for the exemption, which may be the difference between paying transfer duty and not paying transfer duty. It should be noted that the application of the duty exemptions discussed in this article are complex, and that the Victorian State Revenue Office (SRO) has strict evidentiary requirements when determining whether the exemptions apply. This article therefore provides a high-level overview of the exemptions and only as they are relevant for the purpose of the article. Advice should be sought before effecting any transfers referred to in this article. All references to legislation in this article are to the Duties Act 2000 (Vic).

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