By Ron Cohen

19 December 2018

Self managed superannuation funds (SMSF) commonly own real property, the acquisition of which normally attracts a payment of duty in accordance with the Duties Act 2000 (Vic) (“the Act”).

Whether the SMSF has purchased this property outright or though the assistance of a Limited Recourse Borrowing Arrangement (LRBA), duty is usually payable at the normal rates outlined in the Act upon acquisition of the asset. However, where the ownership of SMSF property is transferred either between trustees or between trustees and beneficiaries, certain exemptions may apply.

Transferring Property Between Trustees

Where a SMSF invests in property using a LRBA, two trusts are established to facilitate the loan agreement and ownership rights.The superannuation trust deed establishes a SMSF trustee as the borrower of the funds and the responsible person liable to pay all principle, interest, rates and outgoings associated with the loan.

The other trust is a bare trust where a bare trustee is appointed to hold the property on behalf of the SMSF until the loan has been repaid in full. Once the loan has been repaid, the bare trustee is under an obligation to transfer the property back to the SMSF trustee. This compulsory transfer of property between the bare trustee and the SMSF trustee is often free from stamp duty.

The trusts established under the LRBA will use provisions in the Act to render the bare trustee as the ‘apparent purchaser’ who must hold the real property on trust for the SMSF trustee as the ‘real purchaser’ of the property. Here, an exemption in the Act should apply to relieve further stamp duty on the transfer of the property from the apparent purchaser back to the real purchaser.

Transferring Property from the SMSF to the Beneficiaries

Where the trustee of the SMSF is the only beneficiary of the SMSF, another exemption may apply to exempt the transfer between the trustee and the beneficiary from stamp duty.

The Act may relieve certain other transactions from additional stamp duty where property is passed from a SMSF trustee to beneficiaries.

Usually these transfers are exempt from duty if:

  1. Duty was paid by the SMSF when the property was acquired; and
  2. The beneficiary was a beneficiary at the time of acquisition; and
  3. The value of the dutiable property at the time of the transfer did not exceed the beneficiary’s interest in the Fund.

 

For more information about stamp duty on SMSF property assets, contact Ron Cohen or a member of our Property Law Team at Tisher Liner FC Law.

Related Articles

View All
Business Law / Franchising & Licensing / Real Estate Agents

Thinking of buying or selling a Rent Roll?

However, rent rolls are regulated by the Estate Agent’s Act and it is important that the contract to buy or sell the...
Read More
Information Technology & Innovation / Developments / Business Law

Cyber Security and Protection from Cyber Fraud

Email communication is an inherent part of modern day business It is not uncommon to run an entire transaction online,...
Read More
Employment Law / Business Law / Litigation & Dispute Resolution

What employers need to know when letting someone go

A staff member may need to be let go because the business can no longer afford them, or perhaps they are just not...
Read More
Business Law / Leasing & Lease Disputes / Real Estate Agents

Retail Leases Update for Agents and Landlords

Pursuant to Section 15 of the Retail Leases Act 2003 (Vic), as soon as a landlord enters into negotiations with a...
Read More
Business Law / Commercial Contracts & Agreements / Franchising & Licensing

Franchisors Beware – the ACCC means business!

The action taken by the ACCC against the franchisor related to acting in breach of good faith and making false or...
Read More
Business Law / Personal Property Securities / Small to Medium Enterprises

Personal Property Securities Register (PPSR) Celebrates its 7th Birthday

Financiers who have registered security interests on the PPSR should be aware of this date, as seven-year registrations...
Read More
Business Law / Property & Development / International Investors

Self-Managed Superannuation Funds and Property Investment Part 1: Using Borrowed Funds for Real Property Investment

There are potentially numerous benefits for purchasing property via a SMSF including asset protection and concessional...
Read More
Business Law / Real Estate Agents

Underquoting Agent cops $720,000 fine

What was the case about The case involved 20 breaches of the Australian Consumer Law for underquoting The Agency had...
Read More
Business Law / Intellectual Property / Information Technology & Innovation

Protecting your brand: the importance of a trademark

You may think your business name or logo is super catchy… witty… and perfectly encompasses the goods/services your...
Read More
Charities & Not-for-Profit / Business Law / Charities & Not-For-Profits

“I’m Just a Volunteer” – Liability of Directors or Committees of Not-for-Profits

Often though, the volunteer nature of these organisations may contribute to a failure by the organisation, its’...
Read More
Business Law / Commercial Contracts & Agreements / Franchising & Licensing

Uncertainty: Does your franchise agreement have an enforceable option or an agreement to agree?

Kiraig concerned a master franchisee Its rights to renew for a further term were typical in the franchising space They...
Read More