The Victorian State Revenue Office (SRO) is toughening its stance on the application of the potential duty exemptions available for the transfer of SMSF properties to beneficiaries, according to specialist legal firm DBA Lawyers.
In a blog post on the law firm’s website, DBA Lawyers director Daniel Butler and lawyer Shaun Backhaus warned advisers to be wary of the SRO’s “stricter approach” to the application of the duty exemption available under section 41A of the Victorian Duties Act 2000. Section 41A typically allows for no duty to be charged in the case of an SMSF property being transferred to a beneficiary of the fund if:
- duty was paid on the acquisition by the fund,
- the beneficiary was a beneficiary when the property first became part of the fund, and
- the value of the property transferred does not exceed the value of the beneficiary’s interest in the fund.
Pointing to the SRO’s changed approach, Butler and Backhaus said: “In particular, the issue of determining who is a beneficiary of the fund and whether they were a beneficiary at the relevant time is being raised.
“Moreover, in relation to the payment of death benefits to a dependant or legal personal representative (LPR), the SRO will review the SMSF deed to determine whether it is drafted appropriately to cover the dependant or LPR as a beneficiary.
“We are monitoring the SRO’s position and we strongly recommend that anyone seeking to rely on this exemption obtains advice before completing any transaction. A careful review of the fund’s document trail is needed to ensure the deed and governing rules are appropriate.”
