On 16 December 2016 Queensland Treasurer Curtis Pitt announced that the transfer duty exemption available for the transfer of primary production businesses between family members would be extended to cover all assets of that business. The Queensland Office of State Revenue has since released ruling DA105.3.1 confirming how the administrative arrangement will apply (available here).
Under the Duties Act 2001 (Qld) there is a duty exemption for transfers of land and certain assets of a primary production business from one family member to another family member for use in carrying on that family business. Previously, the exemption was only available where the transfer was made by way of gift, but following changes earlier in 2016 the exemption is now available even if the transfer is made for valuable consideration.
The duty exemption is technically only available for any transfer of ‘business property’ where:
- the transferor, or person directing the transfer, is a defined relative of the transferee
- the transferee takes the transfer in their personal capacity (i.e. not as trustee)
- the business for which the business property is used is carried on by the defined relative (whether alone or with others), and
- the business is intended to be carried on by the transferee (whether alone or with others).
‘Business property’ includes land primarily used to carry on a business of primary production and goods such as plant and equipment and livestock, but does not extend to other business assets such as business names, water entitlements, brands and debtors, even if those assets are also related to the primary production business. However, the announced change has the effect of extending the exemption to all of these other types of business assets to the extent that they are used to carry on the primary production business.
The administrative arrangement applies to all transactions entered into on or after 12 October 2016.
What you need to do
When restructuring the ownership of primary production assets you should consider the duty implications and seek to undertake the transaction in such a way as to minimise the duty payable. We can provide advice on the availability of any relevant exemptions, implement the transaction and attend to stamping under these new rules.