Compliance, Regulation, SMSF

Stamp duty waiver needs legal counsel

Stamp duty exemption concessiobn SMSF Property transfer Division 296 tax

SMSF practitioners could face potential legal action if they incorrectly advise clients that they are eligible for a stamp duty exemption when transferring assets out of a fund.

SMSF practitioners should consult legal experts before advising clients on their eligibility for stamp duty concessions when transferring property assets out of a fund, as failing to do so could lead to them being sued if an exemption isn’t granted, according to an SMSF lawyer.

DBA Lawyers principal Dan Butler made the recommendation during a webinar hosted by his legal firm last week, in the anticipation trustees may begin to restructure their funds to prepare for the introduction of the Division 296 tax.

“In a number of jurisdictions like Victoria, you can actually get an in-kind distribution of property from the superannuation fund out to a member,” Butler noted.

“You’ve got to be very careful here because before you get the stamp duty concession, or before you even tell your client there is a stamp duty concession, you really should get it checked out by a property lawyer who is well experienced in duty in your jurisdiction.

“The revenue departments of each jurisdiction [are] fairly strict with the evidentiary requirements and a number of these do not proceed. If you tell your client there’s a stamp duty concession and they miss out, then who is going to be liable?

“What we say is ‘while there is a possible duty exemption, we would like to get that checked out by a good property lawyer who can give an assessment on what are the likely chances of you getting the duty exemption,” he explained.

Additionally, Butler urged practitioners to incorporate modelling into their planning when discussing the proposed tax with clients, particularly for those with complex asset protection structures in place, to achieve an optimal outcome from a taxation perspective.

“If it was an in-specie distribution of farmland from the super fund out to a member and you were eligible for an exemption from duty, then that might be the way to go,” he said.

“Whereas if it was to go from the super fund to the family trust, you would be paying duty in some cases and it’s unlikely you’d get a duty exemption [if you transferred] from the super fund to a member back up to the super fund,” he concluded.

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