If a company owns a property and someone buys that company...
- Thread starter Brizza
- Start date
I've never heard this term before. Can you elaborate?
Its basically an old loophole which has long been closed.
You could buy a house in a $2 company, and then sell the company (or transfer it) without paying stamp duty, because the company is only worth $2.
So now the assets of the company are taken into account. It could apply to anything held in a company, not just a house.
You could buy a house in a $2 company, and then sell the company (or transfer it) without paying stamp duty, because the company is only worth $2.
So now the assets of the company are taken into account. It could apply to anything held in a company, not just a house.
Thats a big ask. Stamp duty experts charge $800 an hour. Depends on how much do you want to know about land rich entities and its various applications, you could run up a sizeable bill and be none the wiser. If you're daring, have a go at interpreting the Duties Act (NSW) but each state has similar provisions. Let us know how you go.
So what about a company that is just a trustee for a trust which owns the house? I'd like to pay you $800 / hour for your answer, but my company has no assets.
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Changing trustee is not a sale as far as I know, but you may have LPI fees.
I didn't mean a change of trustee, I meant a sale of the company that is trustee.
Dunno if this helps, but my trust has a clause that allows beneficiaries to be added. Is it possible to simply add the purchaser as a beneficiary, resign as trustee & appointer, & transfer those duties to the 'purchaser' in exchange for $$$. CGT & stamp duty would not be payable as there's no change in ownership.
A few provisos...
The trust would have to only own that single asset.
There would probably have to be some sort of price adjustment as the new beneficiary would probably have a lower CGT cost base if they ever sold.
This is a theory, I don't know if it's possible in practice.
Beneficiaries can be added via a new cpy that an existing beneficiary has a share in (according to my trust doco).
Then you'd have to prove that the reason all of this was to not avoid paying tax, otherwise... YOUR GOOOOONE!!!
Section 4a of the Tax Act is it?
Section 4a of the Tax Act is it?
Keithj makes an interesting point, although if this all occurred in a short time frame there would be almost no disputing that the reasoning behind it was to avoid taxes (such as SD). However, I haven't actually explored the possibility of an extended transition period, but will have to have a look at it, where a "purchaser" becomes a beneficiary initially and then after a period is moved into various other roles.
The original purchaser could be maintained as a beneficiary, but under the discretionary trust the trustee could simply decide not to distribute anything to the "old" beneficiaries.
Something to look at? Possibly if you were thinking about "moving assets" to a related party as it would potentially be an extended "settlement" period.
Cheers
BR
The original purchaser could be maintained as a beneficiary, but under the discretionary trust the trustee could simply decide not to distribute anything to the "old" beneficiaries.
Something to look at? Possibly if you were thinking about "moving assets" to a related party as it would potentially be an extended "settlement" period.
Cheers
BR
Part IVA is part of the Income Tax Assessment Act. Part IVA does not apply to the NSW Duties Act.
