As part of the 2014 - 2015 Budget, the Queensland State Government has announced changes to widen the availability of the stamp duty concession for intergenerational transfers of primary production land and business assets.
The Duties Act 2001 (Qld) currently provides an exemption from duty for a gift of farm land and business assets used to carry on a primary production business – provided that the transfer is from an ancestor to their lineal descendant.
The concession is generally used when a farm is gifted to the children or grandchildren of the existing owners. A similar duty exemption is also available on the gift of a partnership interest or units in particular family unit trusts that hold primary production business assets to lineal descendants.
The proposed amendments, which are due to take effect from 1 July 2014, will broaden the scope of these exemptions by removing the requirement that the recipient of the property be a direct lineal descendant of the transferor. This means that the concession will now be available for transfers to a wider range of family members – including spouses, grandparents, siblings, aunts, uncles, nieces and nephews.
While the changes are welcome and provide greater flexibility for succession planning for primary production businesses, it is important to remember that:
- the transfer must still be by way of gift. Where any consideration for the business property passes between the transferor and transferee, the duty exemption will not be available to the extent that consideration is provided. Importantly, if the property is subject to an existing mortgage and the acquirer assumes liability under that mortgage, the assumption of that liability will be treated as consideration for the transfer, and
- even after the amendments, the duty exemption will not extend to transfers to companies or trusts (even if controlled by members of the family group that fall within the range of eligible recipients). This is a significant limitation to the exemption – particularly in circumstances where, in a broader tax and estate planning context, it is often advantageous to have these types of business assets held through discretionary trusts.