Under the current law, it is possible for a member of a self-managed superannuation fund to transfer an asset from his/her personal name into the superannuation fund and only incur nominal stamp duty. That is a significant concession and should be considered.
Once a superannuation fund is placed in pension mode, payments distributed to members are currently treated as tax free and accordingly there can be significant advantages in transferring assets into a self-managed super fund.
The property must be held by the trustee of the super fund solely for the benefit of the persons who transferred the property and for the sole purpose of providing a retirement benefit to the transferring member.
The State Revenue Further Amendment Bill (2014) is currently before the New South Wales Parliament and if passed, will increase the rate of duty from $50.00 to $500.00, which whilst more expensive is much cheaper than stamp duty calculated at normal rates and accordingly still makes such transactions attractive.
As many of our readers would know, self managed super funds can now borrow loan funds provided the purchase by the superannuation fund is effected by a custodian or bare trust company which holds the property for and on behalf of the superannuation fund.
There are exemptions in the Duties Act which enable stamp duty on the bare trust or custodian deed to be paid at a nominal fee of $50.00.
The above mentioned Bill proposes to increase the rate of duty from $50.00 to $500.00 on the bare trust document.
If however a trustees of self-managed super funds wish to avail themselves of the concessional duties, it is important that the documentation associated with such transaction are very carefully drafted to ensure that they meet the requirements of the Duties Act so as only concessional duty is paid. A failure to do so, could result in double stamp duty being payable at full stamp duty rates.
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