Discretionary trusts: duty requirements

Where there is a transfer, or an agreement for the transfer, of property to a beneficiary of a discretionary trust in the exercise by the trustee of a power of appointment over the property, provide:

1. the transaction record (such as an agreement to transfer) or transfer duty statement
2. a completed Foreign Transfer Duty Declaration Form
3. a copy of the trust deed (or stamped copy if executed prior to 1 July 2008)
4. copies of any subsequent amendments to the trust deed (or stamped copy if executed prior to 1 July 2008)
5. a duty endorsed copy of the agreement for transfer for the acquisition of the property by the trust, e.g., contract for sale, offer and acceptance. If this cannot be provided and the transaction lodged relates to residential property transferred, or agreed to be transferred, to a foreign person, provide
   • the date of the original acquisition of the property
   • if the acquisition was after 1 January 2019, evidence whether foreign buyer duty was paid on the acquisition.
6. if the duty endorsed agreement for transfer is not available – conclusive documentary evidence in the form of declarations of trust, trustee’s minutes, financial statements, evidence of payment for the property by the trust, etc.
7. complete financial statements of the trust as at the date immediately prior to transaction and as at the previous 30 June. If the former are unavailable advise of any significant variations between the two dates
8. evidence of any liabilities assumed under the transaction
9. evidence of any debts released or extinguished under the transaction
10. confirmation of whether the beneficiary intends to hold the property as agent, trustee or otherwise on behalf of any other person
11. advice regarding whether, at the time the trustee acquired the property, the beneficiary was a beneficiary or a member of a class of beneficiaries in favour of which the trustee was empowered in the trust deed to appoint the property. Where necessary, confirm how the beneficiary is entitled, e.g., family relationship, and advise the date that they became a potential beneficiary
12. identification of the specific clause(s) of the trust deed giving the trustee a power of appointment over the property
13. any other relevant information that may assist in the assessment of duty.

If there is an acquisition or a surrender of an interest in a discretionary trust by a beneficiary who is a taker in default (i.e., a person who has an interest in the trust in default of an appointment by the trustee of the trust), and the trust holds property either directly or indirectly, provide:

1. the transaction record (such as an agreement to transfer) or transfer duty statement
2. a completed Foreign Transfer Duty Declaration Form
3. a copy of the trust deed (or stamped copy if executed prior to 1 July 2008)
4. copies of any subsequent amendments to the trust deed (stamped copies if executed prior to 1 July 2008)
5. complete financial statements for the trust as at the date of acquisition or surrender or as at 30 June nearest that date
6. complete financial statements for the linked entity as at the date of acquisition or surrender or as at 30 June nearest that date if
   • the trust’s assets include an interest in any one of the following linked entities
     • a listed corporation or a listed unit trust scheme in which the trustee has a 90% or greater interest
     • an unlisted corporation or an unlisted unit trust scheme in which the trustee has a 50% or greater interest
     • another discretionary trust of which the trustee is a potential beneficiary or
     • a partnership of which the trustee is a partner and has contributed, or is required to contribute, 50% or more of the capital of that partnership, or is required to bear 50% of more of the losses of that partnership and
   • the linked entity is entitled to property
7. in respect of the transaction, details of
   • the amount of any consideration being given
   • the amount of any liabilities assumed
   • the amount of any debt released or extinguished
8. details of the percentages of trust income and trust property that the taker in default would receive in default of an appointment by the trustee
9. a completed duties valuation form for all land owned by the trust. Duties valuation forms are not required if a valuation is obtained from a qualified valuer which meets the criteria specified in Commissioner’s Practice TAA 23 ‘Circumstances when a Taxpayer will be Required to Provide a Written Valuation’
10. any other relevant information that may assist in the assessment of duty.

Note: This information is not required where a discretionary trust acquisition or surrender by a person is solely a result of the birth or death of the person, the marriage or divorce of the person, or the beginning or ending of a de facto relationship of the person.

For a transfer or an agreement for the transfer of property to a taker in default on the vesting or termination of a discretionary trust, provide:

1. the transaction record (such as an agreement to transfer) or transfer duty statement
2. a completed Foreign Transfer Duty Declaration Form
3. a copy of the trust deed (or stamped copy if executed prior to 1 July 2008)
4. copies of any subsequent amendments to the trust deed (or stamped copy if executed prior to 1 July 2008)
5. a duty endorsed copy of the agreement for transfer for the acquisition of the property by the trust, e.g., contract for sale, offer and acceptance. If this cannot be provided and the transaction lodged relates to residential property transferred, or agreed to be transferred, to a foreign person, provide
   • the date of the original acquisition of the property
   • if the acquisition was after 1 January 2019, evidence whether foreign buyer duty was paid on the acquisition
6. if the duty endorsed agreement for transfer is not available – conclusive documentary evidence in the form of declarations of trust, trustee’s minutes, financial statements, evidence of payment for the property by the trust, etc.
7. complete financial statements of the trust as at the date immediately prior to transaction and as at the previous 30 June. If the former are unavailable advise of any significant variations between the two dates
8. evidence of any liabilities assumed under the transaction
9. evidence of any debts released or extinguished under the transaction
10. confirmation of whether the beneficiary intends to hold the property as agent, trustee or otherwise on behalf of any other person
11. details of the specific clause(s) of the trust deed relating to the distribution of the trust’s property upon a vesting or termination of the trust
12. where necessary, confirmation of how the taker in default is entitled, e.g., family relationship
13. any other relevant information that may assist in the assessment of duty.

Forms

• Duties valuation forms
• FDA41 ‘Foreign Transfer Duty Declaration’

Publications

• Fact Sheet ‘Foreign Transfer Duty