The State Revenue Legislation Further Amendment Act 2014 (NSW) (Act) was enacted to make important changes to stamp duty, payroll tax and land tax in New South Wales (NSW). These changes have some important benefits for SMSFs, particularly in terms of amendments made to the Duties Act 1997 (NSW).

SMSFs – changes to declaration of trust duty

An SMSF undertaking a borrowing is required to hold property on trust while the loan is on foot. The Act has increased the flat rate charged on the declaration of that trust from $50 to $500. The amendments also limit the flat rate to apply only where:

either

  • ad valorem duty was paid on the acquisition of the property by the custodian or the trustee; or
  • the acquisition was chargeable with nominal duty only (under section 62A of theDuties Act 1997 (NSW));

and

  • consideration for the acquisition was provided by the trustee.

The changes do not affect the ultimate transfer of the property from the custodian to the trustee when the borrowing is concluded. In that case, the SMSF trustee will still need to rely on the apparent purchaser provision as the basis for effecting the transfer without incurring duty.

SMSFs – transfers of property from members to trustees

The Act increased the nominal rate of duty that applies when a member of an SMSF transfers property to the trustee (or custodian of the trustee) from $50 to $500. This flat rate of duty is still only available if the property transferred is used solely for the purpose of providing a retirement benefit to the member who transfers the property.

The Act clarifies that the concession can apply if the transfer is made by more than one member, provided the property is used for the benefit of the members in the same proportions as it was held by them before the transfer. The Act also limits the concession so as to not apply if the property being transferred is held by the member in their capacity as a trustee.