Stamp Duty when Transfer property from Unit Trust to SMSF?

Stamp Duty when Transfer property from Unit Trust to SMSF?

What happens when you transfer your property from your Unit Trust to your Self-Managed Superannuation Fund?

Surely there is no stamp duty. After all, it is just you transferring the property from you to another you? Sadly, the Court said no. The movement of a property between a Unit Trust and an SMSF is a change in beneficial ownership. Therefore, stamp duty applies.Stamp Duty when Transfer property from Unit Trust to SMSF

Rakmy Pty Ltd held land in Richmond, Victoria.  Rakmy first held the land as trustee for the Rakmy Investment Trust ("Unit Trust"). As if by magic, it then began holding the land as trustee for the Rakmy Superannuation Fund ("Rakmy SMSF").  The

In Rakmy's defence the Rakmy SMSF owned 100% of the units in Unit Trust. The Court considered:

  • whether the transfer of the land from the Unit Trust to the Rakmy SMSF involved a "change in beneficial ownership of dutiable property". This was within the meaning of s 7(1)(b)(vi) and sub-s 7(4) of the Duties Act 2000 (Vic); and
  • if so, whether the transfer of the land was exempt from duty under s 36B of the Act.

Rakmy said the Unit Trust owned 100% of the units in the Rakmy SMSF. Rakmy said that the change of capacity in the holding of land did not effect any change to the underlying equitable interests in that land. The stamp duty assessor, on the other hand, argued that the transaction was a 'change in beneficial ownership' of that land. The stamp duty assessor said that the definitions of 'beneficial ownership' and 'change in beneficial ownership' in subsection 7(4) expressly includes the movement of dutiable property between trusts.

The stamp duty assessor, on the other hand, argued that the transaction was a 'change in beneficial ownership' of that land. The stamp duty assessor said that the definitions of 'beneficial ownership' and 'change in beneficial ownership' in subsection 7(4) expressly includes the movement of dutiable property between trusts.

We agree with the stamp duty assessor but only because the deeds were not correctly drafted.

Stamp Duty when Transfer property from Unit Trust to SMSF?

The Court said Rakmy was wrong. The movement of property between trusts can trigger duty. This is the case if there is a change in 'underlying equitable interests'. The Court said, that a transfer of dutiable property between the trustees of 2 different trusts gives rise to a dutiable transaction that, subject to any applicable exemption, is charged with duty. The Court said a change in trusts does result in a 'change in beneficial ownership'. It is, therefore, a dutiable transaction under the Act.

How could you have done this without stamp duty?

Make sure that the terms of the Unit Trust and SMSF Deed ensure that there is no change of beneficial ownership.

This case was just bad planning. Stamp Duty when Transfer property from Unit Trust to SMSF? There is none if the deeds are correctly drafted with greater flexibility.

I would love to chat with you as to how the deeds could be have been correctly drafted to ensure that there is no change of beneficial ownership.

Rakmy Pty Ltd v Commissioner of State Revenue[2017] VSC 237, Victorian Supreme Court, Croft J, 12 May 2017

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