Transferring assets to Trusts

[Bazza]

Hi All,

I believe that in NSW if a property, of less than $1 million, is acquired by a unit trust, then a trustee could redeem the units held by a unitholder and issue new units to the trust with no stamp duty payable.

In other words, you can transfer the ownership of an IP to your family (or Hybrid Discretionary) Trust without paying Stamp Duty?

Is this also the case in Queensland?

Cheers,

Bazza

 

[NigelW]

Originally posted by Bazza
Hi All,

I believe that in NSW if a property, of less than $1 million, is acquired by a unit trust, then a trustee could redeem the units held by a unitholder and issue new units to the trust with no stamp duty payable.

In other words, you can transfer the ownership of an IP to your family (or Hybrid Discretionary) Trust without paying Stamp Duty?

Is this also the case in Queensland?

Cheers,

Bazza

Ah...the old land-rich stamp duty provisions...

Bazza what you say may be true, but:

1) the property must first be owned by a unit trust. If the vendor happened to have this scenario that's fine BUT if you're doing it...why not just acquire the property in your discretionary trust in the first place?

2) in taking over the trust with an underlying company acting as trustee you might be inheriting liabilities of the company. In contrast you get indefeasible title free from prior claims if the title to the property moves to your entity rather than you acquiring units and shares.

3) CGT will still be relevant - altho if it's a 3rd party vendor you don't care.

4) extra complexity & professional costs on an ongoing basis

5) you'll still have to pay duty at the lower marketable securities rate 0.6% on the price of the units.

6) the terms of the unit trust may not be ideal.

The cost involved in setting up the unit trust and company probably negates a goodly portion of any benefit if you're planning this as a marketing strategy to sell a property (ie BUY THIS PROPERTY STAMP DUTY FREE!!! etc)

Of course you should seek professional financial and legal advice specific to your circumstances.

Cheers
N.

 

[Bazza]

Thanks again Nigel - you certainly know a lot about trusts.

I'm still absorbing as fast as I can but I'm not real good at this legal stuff. Can you recommend any good background information on trusts?

Cheers,

Bazza

 

[saskatoon]

Hi Bazza.
Dale G-G's 'Trust Magic' is well worth the money! For more detail buy, or borrow from a library, Nick Renton's 'Family Trusts', available in most bookshops.
Terry

 

[geoffw]

I'll back up the recommendation of dale's book. ($99 from http://www.gatherumgoss.com/shopping.htm ). Dale's first book (also on the same page) covers trusts in a more general sense- and also goes into a lot of other financial matters related to accounting for IPs- also well worth a read.

However, I did find Renton's book rather heavy going- I never made it to the end. I thinks that's a common opinion.

 

[Bazza]

I bought Chris Battens Investment Sturctures 2002 also for $99. The first half was quite good and explained things in layman's terms but I feel asleep somewhere in the second half - too much legal stuff.

I guess I should have bought Dale's since it is highly recommended by you guys but didn't know of it at the time.

Cheers,

Bazza