Transfer to Trust

[zogward]

I have a property in my personal name which generates income.

Im looking at transferring it to a discretionary trust for the purposes of income splitting and capital streaming (when the property is eventually sold).

My question is this. If I establish the trust with myself as the trustee and then notionally transfer the property to the trust, do I still have to pay stamp duty and CGT even though there will be no transfer of legal title?

Alternatively, is there a way I can have documents in place (eg acknowledgement of trust, declaration of trust) to show that when the property was purchased, it was purchased by myself as trustee.

 

[coastymike]

There is only one lawyer I am aware of in nsw who has a private ruling from the osr confirming how to do a no stamp duty transfer. The steps are critical and one step out of place and duty applies. Unfortunately the fee isnt cheap so many people have decided not to do the transfer. Getting it wrong is very easy.

 

[Dimsh]

You do have to pay stamp duty on transfer and it will trigger CGT liability as well. I would stay away from any lawyer sponsored schemes as most likely they are either already illegal or will become illegal in the future.

 

[coastymike]

Dimsh

Why would a scheme which has obtained a ruling from the office of state revenue in nsw and victoria be illegal ?

Agreed in future the loophole may be closed but it is like saying something is illegal despite receiving a positive response from a private binding ruling.

Doesnt make sense to me. If it was just a lawyers opinion then that is different but ive seen the opinion from the osr stating no stamp duty applies in nsw provided the steps taken in the ruling are applied.

 

[Terry_w]

My question is this. If I establish the trust with myself as the trustee and then notionally transfer the property to the trust, do I still have to pay stamp duty and CGT even though there will be no transfer of legal title?

This is a declaration of trust.

I would speak to Coastymike about the strategy to avoid stamp duty and CGT. I don't know how it is done, but if you can avoid these then great.

 

[Roomer]

Unless you are talking a very short timeframe, surely if the property has already been income producing, you would have declared this fact via declaring this income in your personal tax returns ; so you would have already alerted the ATO to the particulars of that property?

If you were somehow to be successful in this transfer, wouldn't you be risking any cross checking of the ATO's data bases, ie this property that was income producing in your name is the same property now being declared under another entity but there is no record of how that property was disposed. Another question might be why is there no longer income being declared by yourself on that property , so when did you dispose of it and for how much.

And wouldn't all that come back to bite you in the bum in a very very nasty manner?

 

[Paul@PFI]

This is a declaration of trust.

I would speak to Coastymike about the strategy to avoid stamp duty and CGT. I don't know how it is done, but if you can avoid these then great.

This arrangement still results in CGT.