The NSW Civil and Administrative Tribunal has set aside a notice of assessment for transfer duty on the transfer of real estate from one sole member SMSF to another.

The facts

For more than 20 years, Mr Forbes was the sole member of an SMSF, with both a pension and accumulation account. The assets of the SMSF included real estate.

Following the 2016 changes to superannuation, Mr Forbes established a second SMSF, of which he was also the sole member. He rolled his pension to the new SMSF and transferred real estate from his original SMSF to the new SMSF.

Mr Forbes claimed a concession from transfer duty for the transfer of the property between the funds under section 61 of the Duties Act 1997 (NSW), which provides concessional duty on the transfer of property in connection with a member ceasing to be a member (or ceasing

to be entitled to benefits) in a fund and becoming a member (or becoming entitled to benefits) in another fund.

The NSW Office of State Revenue assessed the transaction as dutiable and argued the concession only applied if Mr Forbes ceased to be entitled to all benefits in the original SMSF.

The decision

The Tribunal decided that section 61 applied to the transfer of the property and only concessional duty was payable. The Tribunal agreed with Mr Forbes that there is no requirement in section 61 for a member to cease to be entitled to all benefits in a transferor fund for the concession to apply.

Why is this decision relevant?

This decision provides some opportunities for members of SMSFs holding real estate to restructure the affairs of their SMSFs in some states.

The NSW section is echoed in the Victorian and South Australian duty legislation. It is possible that this decision could be used in support of a similar strategy in either of those states.

In Queensland, the legislation applies in more situations as it provides for concessional transfer duty on a transfer of property because of the merger of two or more funds or the splitting of a single fund into two or more funds. There is no requirement for the extinguishment of benefits.