In Queensland, transfer duty (Transfer Duty) is governed by the Duties Act 2001 (Qld) (Act). Pursuant to section 8(2) of the Act, Transfer Duty is imposed on the dutiable value of “dutiable transactions” (Dutiable Transactions).
What are “Dutiable Transactions”?
Dutiable Transaction is defined in section 9(1) of the Act as (amongst other things):
- a transfer of dutiable property;
- an agreement for the transfer of dutiable property;
- an acquisition of a new right on its creation, grant or issue;
- the creation or termination of a trust of dutiable property; and
- a trust acquisition or trust surrender.
What is “Dutiable Property”?
Dutiable property (Dutiable Property) is defined in section 10 of the Act as:
- land in Queensland;
- a transferable site area;
- an existing right;
- a Queensland business asset;
- a chattel in Queensland; or
- an interest in any of the above, except for a trust interest.
Prima facie, as the issue of a unit in a unit trust is not included in the definition of Dutiable Property, it could be inferred that it is not a Dutiable Transaction. However, for reasons explained below, this is not always case.
What is a “trust acquisition”
As stated above, section 9(1) of the Act provides that a trust acquisition or surrender is a Dutiable Transaction.
Section 55 of the Act states that:
“A person makes a trust acquisition if the person acquires a trust interest in a trust that – (a) holds dutiable property; or (b) has an indirect interest in dutiable property.”
“Trust interest” is defined in section 57 of the Act as:
“(1) A trust interest is a person’s interest as a beneficiary of a trust, other than a life interest;
(2) For a trust that is a discretionary trust, only a taker in default of an appointment by the trustee can have a trust interest.”
Takeaways
Therefore,
- there will be Transfer Duty imposed on the issuance of a unit in a unit trust where that unit trust has an interest in dutiable property; but
- there will not be Transfer Duty imposed on the issuance of a unit in a unit trust where that unit trust holds no dutiable property, or any interests therein.
Links and further references
Legislation
Further information about unit trusts
If you need assistance with establishing a unit trust, please telephone me for an obligation free and confidential discussion.
Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
T: +61 7 3221 0013 (preferred)
M: +61 419 726 535
E: mburrows@dundaslawyers.com.au
Disclaimer
This article contains general commentary only. You should not rely on the commentary as legal advice. Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.
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