If you own a Family Trust that owns residential land in NSW or intend to purchase residential land and/or premises using your Family Trust, please note that Revenue NSW considers a Family Trust to be automatically subject to the foreign person surcharge on stamp duty and Land Tax.
The surcharge for land tax is 2% above the usual charge of 1.6%.
The surcharge for a foreign Person purchasing land is 8% of the purchase value.
Land Tax is charged every year so it is a particularly penal and unfair provision. It takes the annual land tax charge to 3.6% per year. If you had land with a land value of the $400,000.00, your annual land tax bill would be $14,400.00!
Stamp duty on the purchase of a $400,000.00 property would increase from $13,432.00 to $ 45,432.00, a 32,000.00 penalty!.
Most Family Trusts deeds, have a very broad definition of a “beneficiary”. Revenue NSW has taken the view that if the definition in your Trust Deed could possibly permit a benefit to be paid to a foreign person (even if that has never occurred or is never likely to occur), it will deem the Trust to be automatically subject to foreign person surcharge on stamp duty and/or Land Tax.
You may or may have already received a letter from Revenue NSW advising that your Family Trust may be subject to the 2% land tax surcharge.
There is however a way to avoid the surcharges, provided you don’t have foreign persons as beneficiaries.
Most Family Trust Deeds permit the terms of the Trust Deed to be amended. The solution is to exclude foreign persons as potential beneficiaries of your Trust.
Each terms of each Discretionary Trust Deed are different and accordingly a thorough reading of the Trust needs to be undertaken to enable the amendments to be made to protect your interest.
At Everingham Solomons, we have the expertise to assist you in all of your legal matters because Helping You is Our Business.
It is said, “The only constant in life is change”. How true, particularly in law where legislation seems to be constantly changing.
For those of you who are looking to develop residential property or purchase new residential property you need to be aware of the new requirements which came into effect on 1 December 2019.
A developer is now required to provide a Disclosure Statement which should be attached to the Contract.
The Disclosure Statement needs to include:-
• A draft plan of the property prepared by a Registered Surveyor showing the lot number, location and area;
• A draft floor plan and location plan of the property;
• Any proposed bylaws, development Contract (including strata development contract) and management statement; and
• Schedule of finishes to be included in the property.
Also of particular note are the following changes:-
• The Cooling Off period for a purchase “off-the-plan” has been extended from 5 business days to 10 business days;
• If there are any material changes to the subject property the developer is required to serve a “notice of change” which may trigger a
right for the purchaser to rescind or claim compensation of up to 2% of the purchase price from the developer. The purchaser may only
rescind if the change was such that the purchaser would not have entered into the off-the-plan Contract and they would be materially
prejudiced by the change;
• The purchaser is not required to settle earlier than 21 days after receiving copies of the registered plan and other documents
associated with the plan; and
• The deposit paid by the Purchaser must be held in a Trust Account or Controlled money account (investment) by a Real Estate Agent,
Licensed Conveyancer or Legal firm pending completion and cannot be released to the developer.
The above seem to imply that the legislation relates to strata unit developments. That is not the case as the legislation also includes vacant land which is capable of having a residence constructed on it.
Everingham Solomons can assist whether you are a purchaser or developer because Helping You is Our Business.
The position of a trustee of a trust is an important position which is governed by State and Commonwealth Legislation and Case Law.
Trustees of a family trust have many duties. Broadly speaking, these include the trustee:
• Acting in good faith;
• Acting personally;
• Acting unanimously where multiple trustees are involved;
• Not being dictated to by others such as beneficiaries;
• Having a duty to consider how distributions should be made and to whom; and
• Having a duty to avoid fettering of any discretion they have.
So can a trustee appoint someone else to perform the trustee’s duties, like an attorney? It is not uncommon to see where a Trustee has executed a power of attorney in favour of third party.
The law is that a trustee cannot delegate these duties unless permitted by the Trust Deed, legislation or a Court Order.
The office of trustee is viewed by the Courts as one of trust and personal confidence.
A trustee must not execute a Power of Attorney to a third party granting the attorney, general or wide powers relating to the authority of the trustee. A trustee who does this will be acting outside the scope of the trust and the law and any transaction entered into utilising such Power of Attorney is likely to be unenforceable.
Section 10 of the NSW Powers of Attorney Act states that a prescribed Power of Attorney does not confer authority to exercise any function as a trustee.
Accordingly, a trustee cannot delegate their powers and authorities.
There is a statutory exception with respect to trustees of a self-managed super fund.
Trusts, trust deeds, trustee duties and the law surrounding them are complex.
At Everingham Solomons, we have the expertise to assist you because Helping You is Our Business.
Quite often, land developers place restrictive covenants on land. For example the restrictive covenant be that: the land shall only be used for residential purposes, the buildings must be of a certain size or of a certain material or type of construction or design.
Are these restrictive covenants enforceable? The answer is sometimes yes and sometimes no.
Let’s take another example. If you purchase land in a subdivision which contains a restrictive covenant that permits the erection of a single residential building only, can you legally erect a multiple occupancy dwelling such as a duplex or triplex?
Despite what most people think, if the Local Government zoning laws permit multiple occupancies and a Development Consent to build multiple occupancies is granted by the Local Council, then the Council’s Development Consent overrides the restrictive covenant on the land. Therefore the restrictive covenant is ineffective and you can build a multiple occupancy dwelling on the land.
This is because of the provisions of Section 28 of the Environmental Planning and Assessment Act 1979 which clause is mirrored in Clause 1.9a of the Tamworth Local Environmental Plan, provides that to enable any development that has been approved by the Local Council, any covenant or other restriction on use of the land, shall not apply.
The aim of the legislation is to permit any development that is permitted by the zoning laws to be carried out irrespective of private covenants.
Section 28 however only affects a restrictive covenant to the extent that the covenant conflicts with a planning instrument or a consent.
Accordingly, Section 28 will not affect a restrictive covenant where the covenant does not conflict with an environmental planning instrument or development consent. For example in a restrictive covenant in relation to design of a structure, the type of fencing, the type of lawns etc, will remain valid and enforceable.
Land Law is complex.
At Everingham Solomons we have the expertise to assist you in all of your land dealings because Helping You is Our Business.
Before you can advertise a residential property for sale you are required by law to have a copy of the Contract available for prospective Purchasers to inspect. This is required whether you propose to sell through a Real Estate Agent or privately.
To enable a Contract to be prepared you should contact your Solicitor or Conveyancer as soon as possible to avoid delays in getting the Contract prepared.
Legislation sets out various documents and certificates that are required to be attached to the Contract, failure to attach these could potentially give the Purchaser a right to get out of the Contract after Contracts have exchanged.
In addition to title searches, a Planning Certificate and Sewage Service Diagrams being attached to the Contract, the following additional documents may be required depending upon the property and work which may have been carried out:-
Swimming Pool Certificate of Compliance if you have a swimming pool or spa;
Home Warranty Insurance now issued under the Home Building Compensation Fund is required if you have undertaken residential building work in the last six years (for structural work) or two years (for non-structural work) and where the value of the building work is over $20,000.00;
Final Occupation Certificate if you are selling a newly constructed dwelling or a dwelling where you have carried out additions which required Council approval.
There may be issues that may be prudent to be disclosed in the Contract ie things like illegal building work; fencing disputes; any issues with encroachments by or upon the property ie is a structure located over a boundary.
This is certainly not an exhaustive list however it should assist when you start thinking about your property and what you should be discussing with your Solicitor or Licensed Conveyancer.
If you are looking at selling a hobby farm; rural property, commercial or industrial property, there are likely to be numerous other issues to take into consideration in preparing your property for sale.
Ready to take the next step? Contact the property team at Everingham Solomons, because Helping You Is Our Business.
This is an often asked question. Typically, someone will have bought a property at auction in their own name, or from an off-the-plan development and then decide they want to buy the property in the name of their spouse or some other entity like their super fund.
The decision to change names often happens after they have discussed the purchase with their accountant and/or solicitor and things like asset planning and estate planning are raised.
Most people seem to think they can simply change the “purchaser” on the contract by inserting the words “or nominee”.
That process in most cases will not work and will result in you paying double Stamp Duty.
In NSW, the name on the Contract needs to be the same name on the Transfer document. On a $1,000,000.00 purchase price, the Stamp Duty payable by the purchaser is $40,490.00.
If the purchaser on the Transfer is different to the person on the Contract, then the Transfer will be treated as a sub-sale, resulting in a second or additional Stamp Duty amount of $40,940.00 being payable on the Transfer document.
There is an exception; for some limited circumstances contained in Section 18(3) of the Duties Act. This Section allows the ultimate purchaser to be a different person from the purchaser in the Contract, so long as they are related persons.
A related person includes a spouse, parent and child. It can also be a private company where the person is a director or majority shareholder of that company. It can also be a Trust where the natural person is a beneficiary of the trust.
The crucial point when applying S18(3) and which is often missed, is that the ultimate purchaser must have been “related” when the Contract was entered into. So you cannot form a company or trust after the date of the initial Contract.
If the “related person” exemption is not available, then your only real alternative is to attempt to persuade the vendor of the property to rescind the original Contract by mutual agreement and enter into a new Contract.
Sometimes this is possible; however, invariably you end up paying yours and the sellers the legal costs of the rescission of the initial Contract and the new Contract. Sometimes the vendor simply does not want to be involved in such a process
The best option in all cases is to seek appropriate advice as to the purchasing entity and buy it in the correct name from the very beginning.
Our property team at Everingham Solomons can assist you with all your property related matters because Helping You is Our Business.
Everingham Solomons is proud to be one of the major sponsors and organisers of the Pedal the Peel Cycling Challenge to be held at Moore Creek Tennis Club, Moore Creek Rd, Tamworth on Sunday, 7 April 2019.
The event is unique to Tamworth because it caters for all levels of rider fitness and experience.
You can choose from a flat 15 km or 25 km course or the more challenging 45 km or 100 km hilly courses.
The event is designed to encourage all levels of riders (minimum age 12 years) to become involved, have a great fun day and help raise money for local charities.
It is unique because we don’t ask you to raise thousands of dollars sponsorship to ride in the Challenge.
You only need to pay your registration fee of $50 per rider. If however you register before 28 February, there is an earlybird fee of $35.
Included in the registration fee is a steak sandwich and drink which will be provided on return to the start/finish location at Moore Creek Tennis Club. There will also be live music at the start/finish site, so you can enjoy some socialising on your return.
It’s unique because it supports lesser known and less well-supported community organisations.
This year the event will support Youth Insearch which is a grass roots, early intervention program which works with at risk youth and focuses on resolving adolescent issues at peer level. This organisation has had tremendous results in assisting at risk youth change their lives.
We all know that mental health has become a huge issue, so we are continuing to support Billabong Club House.
Domestic violence is also a large and sometimes hidden issue in our region and this year we will be supporting Tamworth Family Support Service to help fund a 12 week support group for women, the victim of domestic violence.
We will also be supporting Rotary Lodge which provides emergency accommodation at Tamworth Base Hospital. The lodge is in urgent need of renovation.
You know the event will be well-run and costs kept to an absolute minimum because it is an event organised by the Rotary Clubs of Tamworth First Light and the Rotary Club of Sunrise.
We encourage you to support this valuable community fundraising effort.
You can register online at www.pedalthepeel.org.au
Quite often during marriage, separation and/or divorce, estate planning is the last thing on your mind. There can however, be a number of serious repercussions for your wealth, when getting married or splitting up.
It is important to know that getting married revokes a person’s existing Will. Therefore if you die after getting married, you may die without the benefit of a Will and your assets may pass to beneficiaries who you would not otherwise have chosen. This is particularly relevant in second and third marriages.
People should immediately update their Will as soon as possible after marriage or alternatively execute a Will prior to their marriage which is made in contemplation of their marriage to a certain person.
What about divorce and separation?
You must be separated from your spouse for 12 months before you can finalise your divorce. Separation has however, no impact on the validity of your Will which means that any asset given to your former partner would still be distributed to them if you died.
This is not a desirable situation for couples who have recently separated, so it is advisable to update your Will as soon as possible after separating from your partner.
A divorce, once approved by the Family Court, does revoke your previous Will.
Once divorced you need to prepare a fresh Will, otherwise you will die intestate and your assets may be distributed to persons that you would not have otherwise chosen.
In a separation divorce or marriage scenario you also need to consider who you have selected to manage your financial affairs in the event that you cannot. So in these circumstances you may also need to update your power of attorney.
We can assist you at Everingham Solomons with all of your estate planning needs because Helping You is Our Business.
Everingham Solomons Solicitors is proud to announce that George Hoddle and Clint Coles have been appointed as Directors of Everingham Solomons, in recognition of their expertise in their chosen fields of law, their professionalism, their commitment to the North West and their continued growth as lawyers.
George was admitted as a Solicitor in 2008 and holds a bachelor of Law and a bachelor of commerce.
George’s work is focused on commercial litigation, dispute resolution and employment law matters with a particular focus on rural issues.
George has been involved in a number of large complex commercial matters whilst working in Sydney prior to joining the firm.
George has a particular interest in resolving disputes between parties practically and cost effectively. He enjoys being involved in and assisting in building disputes and construction matters.
George grew up in Gunnedah, is married with three children and currently resides in Carroll on a rural property.
Clint Coles commenced working with Everingham Solomons in 2010 as a Law Clerk having previously been awarded the Sir Adrian Solomons Memorial Law Bursary prior to commencing his legal studies.
In 2013, Clint completed a Master’s Degree in Commercial Litigation, with a focus on commercial remedies available under contract, trade protection legislation and equity.
Clint is now completing a Master of Laws at the University of Sydney and the Chartered Tax Advisory program through the Tax Institute.
Clint enjoys being involved in commercial litigation as well as commercial business and property transactions.
At Everingham Solomons we invest significantly in training and up skilling our young professionals so that we can offer a diverse range of expertise in a variety of areas that few regional legal firms can emulate.
We aim to deliver practical solutions and personalised service with integrity and this tradition is continuing with the appointment of George and Clint as Directors of our firm.
We are proud to announce and congratulate George and Clint on their appointments.
If you need assistance in a legal matter, please contact us becauseHelping You is Our Business.
Whilst a company structure generally protects directors from being personally liable to pay the company’s debts, this is not always the case. Further Directors may be fined personally by ASIC, or may have to pay the companies taxation liabilities such as PAYG or employee superannuation payments.
So, yes it is a good idea to have what is called a Deed of Access and Indemnity.
The deed is a contract between each director and the Company.
It gives the Directors access to the company’s records, payment of legal costs, and requires the company to affect directors and officers insurance, both during the director’s appointment and for a period of years thereafter.
The deed also provides a broad indemnity which means that the Company promises to pay a director for any liabilities and legal costs which arise from being a director of the company. It covers all claims arising from the acts or omissions to the maximum extent permitted by law.
Importantly the indemnity also covers a period of years (normally 6 years) after the director’s appointment has been terminated.
The Corporations Act however limits the indemnity that is provided. Firstly, you cannot be indemnified if you breach your director’s duties as specified in the Corporations Act. For example, if you incur debts when there is no reasonable prospects of the company being able to pay those debts, then you will be personally liable.
The key director’s duties include acting in good faith, acting in the best interests of the company and ensuring the company does not incur debts whilst it is insolvent.
Directors are also responsible to ensure that the company meets its financial obligations to employees, such as paying PAYG tax and paying employee superannuation.
The Deed of Access and Indemnity helps manage your risks as a director, particularly where you have acted in good faith.
At Everingham Solomons, we have the commercial experience to assist you with all of your business needs because Helping You is Our Business.
If you own a Family Trust that owns residential land in NSW or intend to purchase residential land and/or premises using your Family Trust, please note that Revenue NSW considers a Family Trust to be automatically subject to the foreign person surcharge on stamp duty and Land Tax.