SYDNEY Thursday 1 August 2013 – Changes to the duties law in Queensland will ‘positively’ affect an SMSF buying property in Queensland through a limited recourse borrowing arrangement (LRBA), says Townsends Business & Corporate Lawyers principal Peter Townsend.
On 12 June this year the Queensland Duties Act was amended, and these amendments apply retrospectively from 26 October 2011. ‘No, that’s not a misprint,’ says Townsend. ‘That’s 2011.’
The change impacts the purchase of QLD property using an LRBA, including purchases ‘off the plan’. ‘The changes are positive for SMSF trustees,’ says Townsend. ‘They remove any confusion as to how to apply for the concessional duty on the transfer of the property by the holding trustee back to the fund following repayment of the loan.’
The legislative changes clarify that instead of relying upon the ‘Nominee Agreements under Agency Relationships’ (the so-called ‘apparent purchaser’ provisions), Queensland has now legislated to provide specifically for transfers of property in relation to superannuation trustees and holding trustees (i.e. custodians or bare trustees etc).
The new s130B of the Queensland Duties Act clearly outlines the requirements to apply for an exemption from state duty when transferring property from a holding trustee to a fund trustee. It provides that transfer duty will not be imposed on transfers from a trustee to a custodian, or a custodian to a trustee, where the property continues to be property of the super fund and the member’s interest in the property does not change after the transfer has been completed.
The super fund also needs to show that it has elected to be a regulated fund and the transaction has otherwise complied with the requirements of the SIS Act.
‘The change in legislation doesn’t close the door on using the previous ‘apparent purchaser’ method which involved proof (and recognition by the Queensland Duties Office) of an agency relationship between the fund and the holding trustee,’ says Townsend.
‘However the new legislation is clearly a much easier alternative in that it is targeted specifically at LRBA transfers. The previous method was not expressly drafted for superannuation transactions of this nature.’
There is no restriction relating to when the property was initially bought by the custodian/holding trustee. The new legislation applies to any repayment of the loan occurring since 26 October 2011.
If an LRBA is coming up for final repayment, then the fund is now facing five different alternatives.
Caroline Harley
Associate
Townsends Business & Corporate Lawyers
02 8296 6201
caroline@townsendslaw.com.au