MGS Private can arrange the following movements of property in Western Australia without attracting a liability to duty.
Legislation/Other Material: Duties Act 2008, Income Tax Assessment Act 1936, Income Tax Assessment Act 1997, Land Tax Assessment Act 2002, Superannuation Industry (Supervision) Act 1993
Revenue WA has confirmed that Duty will not be payable under the following restructures if the documents prepared to give effect to the restructure meet certain guidelines. A ruling has been issued by Revenue WA confirming the circumstances when duty would not be payable. Counsel's advice is available for larger or complex transactions.
The property that may be moved without duty includes:
The transactions that do not give rise to a liability to duty include:
Every situation is different and requires careful consideration and analysis to understand whether based on the facts the legislation allows the movement without incurring duty. Other taxes including income tax and goods and services tax may apply in certain situations.
Significant advantages may be achieved in relation to the movement of active assets and the capital gains concessions and exemptions contained in Subdivision 126G, Subdivision 152A and Subdivision 328G of the Income Tax Assessment Act 1997.
The following 9 examples are to provide a guide of what can be achieved when restructuring a taxpayer's affairs and the associated Stamp Duty, Income Tax and Land Tax savings*:
* Examples below indicate various commercial considerations that guide transactions
** Would need to be business real property pursuant to section 66(5) of the Superannuation Industry (Supervision) Act 1993
*** Western Australia does not presently have a period for notional estates. In New South Wales the period is 3 years before death per subsection 80(2) of the Succession Act 2006 (NSW).
The following examples are ones whereby the movement of the property would not trigger a liability to duty. The examples involve a disposal of the property, so CGT is a consideration, however many of the examples take advantage of Subdivisions 328-G and 126-G of the Income Tax Assessment Act 1997 so the capital gain is disregarded. Consideration should also be given to Division 152 of the Income Tax Assessment Act 1997.
Mr Smith, a married father of two, owns a residential or commercial rental property in his name. He wishes to move it to a trust so that he has flexibility of whom within his family may benefit from the property and/or for asset protection purposes. If it is a development site, he might want to put it in an appropriate structure.
Before restructure:
After restructure:
Mr and Mrs Smith have moved out of their principal place of residence and acquired another principal place of residence. They moved out less than 6 years ago. They wish to transfer the former principal residence to a trust to refinance their equity in the property.
Smithco Pty Limited owns a commercial property that is used in the business operated by Smithco Pty Limited. The property has a cost base of $1,000,000 and a market value of $10,000,000. The turnover of Smithco is less than $10million. The property is moved to a unit trust with a discretionary trust holding the units. The shareholders of Smithco Pty Limited are the principal beneficiaries.
Before restructure:
After restructure:
The Smith Unit Trust owns 3 properties with different cost bases and market values. It is desirable to separate the 3 properties so that each property is owned by a separate unit trust. As long as the conditions in Subdivision 126-G of the Income Tax Assessment Act 1997 are met, any capital gain can be disregarded.
Before restructure:
After restructure:
The Smith Discretionary Trust owns 3 properties with different cost bases and market values. It is desirable to separate the 3 properties so that each property is owned by a separate unit trust. Multiple land tax thresholds may be available.
Before restructure:
After restructure:
The Smith Discretionary Trust owns a commercial property that is rented. They wish to move the property into their self-managed superannuation fund. This may be done without duty.
Before restructure:
After restructure:
Mr and Mrs Smith own 3 properties as joint tenants. They wish to move each property to a unit trust to save on land tax and provide for flexibility. A capital gain may occur on the disposal to the various unit trusts.
Before restructure:
After restructure:
The Smith Discretionary Trust owns a property but is about to vest in 10 years.
Before restructure:
After restructure:
Mr Smith owns a property in his own name but is afraid relatives or others are going to challenge his decisions and his will under the Family Provision Act 1972. He decides to move the property to a trust structure and outline in the trust how the income and capital is to be appropriated by way of estate planning. If more than 3 years pass between the movement and his death the property is protected from family provision claims.
Before restructure:
After restructure:
