Special Disability Trusts – Part 5: State Duty Concessions or Exemptions

Welcome to the fifth article in our series on Special Disability Trusts (SDTs), where we hope to demystify particular aspects of these trusts, and highlight the benefits, eligibility requirements and restrictions to look out for.

As discussed in our previous articles in this series, the two main benefits of establishing a SDT for a vulnerable person are:

  1. Protecting the person from poor decision making and exploitation from others; and
  2. Preserving the person’s receipt of the Disability Support Pension (DSP).

In this article we discuss the duty concessions and/or exemptions that may be available when transferring a dutiable asset to a SDT.

State Duty

Ordinarily, if a dutiable asset (most commonly real estate) is transferred to an individual or entity, duty will be payable by the recipient to the revenue office in the relevant State or Territory in Australia.

However, all States and Territories in Australia have introduced exemptions or concessions regarding stamp duty on transfers of dutiable property to a Special Disability Trust, with some differences between the jurisdictions.

In some jurisdictions the concessions or exemptions only apply to a transfer of real estate that is to be used by the Principal Beneficiary of the SDT as their Principal Place of Residence. Other jurisdictions require the transfer to be made for no consideration (ie as a gift) and only if the gift is from an immediate family member (which is defined as being a natural parent, adoptive parent, step parent, legal guardian, grandparent or sibling of the Principal Beneficiary). We note that South Australia has all three requirements but if these are met then there is a full exemption from stamp duty.

A summary of the relevant provisions for each State and Territory is set out in the following table.

ACT
S73B Duties Act 1999
Duty is not payable on a transfer or grant of a dutiable lease where:
a) the transfer or grant is to an SDT; and
b) the property is to be used as the PPR.
NSW
s65(22) Duties Act 1997
No duty is chargeable on:
a) a declaration of trust over property to be held by trustee of a SDT;
b) a declaration of trust over property or an instrument executed for purpose of establishing a SDT; and
c) a transfer or property to a SDT if there is no consideration.
NT
Sch 2, 6(e) Stamp Duty Act 1978
Exemption from duty where:
a) no valuable consideration for the conveyance; and
b) the conveyance is made to an SDT.
Qld
s126A Duties Act 2001
Transfer duty is not imposed in relation to:
a) a transfer of property to a SDT;
b) creation of a SDT to hold property; and
c) a trust acquisition of dutiable property where that property is or will be used as the PPR by the Principal Beneficiary of the SDT.
SA
s71CAA Stamp Duties Act 1923
The following are exempt from stamp duty:
a) a declaration of trust to establish an SDT; and
b) a transfer of land to an SDT provided that:
• the declarant or transferor is an immediate family member of the Principal Beneficiary;
• the property is or will be used as the PPR within 12 months; and
• there is no consideration on the transfer.
Tas
s54 Duties Act 2001
Duty is not chargeable on:
a) a declaration of trust over property to be held by trustee of a SDT; or
b) a transfer of property to a SDT provided that:
• the property is land which has a dwelling that will be the PPR of the Principal Beneficiary; and
• the property is goods that will be situated or used on such land that will be the PPR.
Vic
s38A Duties Act 2000
No duty is chargeable on:
a) a declaration of trust to establish an SDT; or
b) a transfer of property to an SDT provided that:
• the declarant or transferor is an immediate family member of the Principal Beneficiary;
• there is no consideration on the transfer; and
• the dutiable value of the property does not exceed $500,000 (if the value exceeds $500,000, duty is only payable on the excess).
WA
s111 Duties Act 2008
Duty is not chargeable on a transfer or an agreement to a transfer of dutiable property to an SDT, if there is no consideration.

How we can help

If you (or someone you know) are considering gifting a dutiable asset (such as real estate) to a SDT, then this could be something to explore further. You should first seek advice from a licenced financial planner who has expertise in this area, to see if this would be suitable for your particular circumstances.

Look out for the next article in our series, when we discuss the Capital Gains Tax relief that may be available when transferring CGT assets to a Special Disability Trust. For more information or guidance, please do not hesitate to contact us.

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