Transfer Duty and issuance of units in a unit trust

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.

Further references

Legislation

Duties Act 2001 (Qld)

Related articles by Dundas Lawyers

Transfer Duty and loans

Transfer Duty in business acquisitions

Trust restructures – relief from capital gains tax

Re-settlement of trusts – towards a definitive test

Further information

If you need assistance with establishing a unit trust, please telephone me for an obligation free and confidential discussion.

Brisbane LawyersMalcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013 | Fax: (07) 3221 0031
Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au

Disclaimer

This article is not legal advice. It is general comment only.  You are instructed not to rely on the commentary unless you have consulted one of our Lawyers to ascertain how the law applies to your particular circumstances.

Dundas Lawyers
Street Address Suite 12, Level 9, 320 Adelaide Street Brisbane QLD 4001

Tel: 07 3221 0013

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