Since the introduction of limited recourse borrowing arrangements under the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) there has been a risk that double transfer duty would apply to these transactions in Queensland.
The amendment of the Duties Act 2001 (Qld) (Act) to include a duties exemption for transfers of fund property under section 130B has brought relief to the minds of SMSF trustees that enter into limited recourse borrowing arrangements.
What does section 130B do?
Section 130B provides an exemption from transfer duty for transfers, or agreements for transfer, of fund property of an eligible superannuation fund from:
- the trustee of a superannuation entity to a person acting as custodian for the trustee; or
- a person as custodian for the trustee of the superannuation entity to the trustee.
Therefore, transfers of fund property from the custodian of a security trust to the trustee of a SMSF once the debt has been repaid will not be liable for duty.
What transactions are covered by the change?
The amendment commenced from 12 June 2013 but applies to transactions from 26 October 2011.
If you have not transferred a property acquired under a limited recourse borrowing arrangement from the custodian to the SMSF trustee due to the uncertain duty position, this amendment gives comfort that you will not be liable for duty on this transfer.
Curiously, the exemption refers only to the current limited recourse borrowing arrangement provisions in the SIS Act. It’s not clear whether the exemption will apply to arrangements pre-July 2010. Those with the early arrangements should seek advice if they are looking to invoke section 130B.
What should you do if you have been assessed for double duty?
If you have been assessed for duty on the acquisition of the property by a SMSF (which is registered in the name of the custodian) and again on the transfer of that property from the custodian to the SMSF once the debt had been repaid, you should apply for a reassessment of the duty.