Trustees of discretionary trusts that hold real property in New South Wales must urgently review their trust deeds in light of the extension of the definition of ‘foreign trustees’ for the purposes of transfer duty and land tax.

The practical consequence of the State Revenue Legislation Further Amendment Bill 2019 is that a trustee of a discretionary trust will now be deemed to be a “foreign person” if the terms of the trust deed allows foreign persons to be beneficiary.

Foreign Trustee Surcharge and Land Tax

A discretionary trust which is a “foreign person” will attract the higher rates of surcharge purchaser duty (additional 8%) and surcharge land tax (additional 2%) in relevant circumstances.

The consequences of these changes can be averted (and refunds of any amounts already paid pursuant to the changes obtained) if the trust deed is amended to the following effect:

1. The terms of the trust deed prevent a foreign person from being a beneficiary; and
2. The clause preventing a foreign person becoming a beneficiary cannot be amended to allow a foreign person to be a beneficiary at a later time.

The revised deadline for when amendments must be made is yet to be confirmed, but steps to review and amend (where necessary) should be taken as soon as possible.

Importantly, the question of whether to amend will need to be given careful consideration in terms of the broader distribution and tax strategy for the trust and associated entities. Indeed, there may some circumstances where the exclusion of foreign persons as beneficiaries will not be appropriate.

To discuss whether your deed needs to be amended, please contact David McKewin, the head of the Rouse Lawyer’s Private Wealth Team. ...

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In every conveyancing matter where there are two or more buyers, we are required to ask the question “will you be joint tenants or tenants in common?” Commonly, when we poise this question the response is usually a short silence followed by “what’s the difference?”

Regardless of whether the buyers are a married couple, family members, or friends, it is very important to ensure that the type of ownership agreement you have in place is the right one. If everyone understands the type of ownership applicable to them and its effects, this may help to prevent any problems down the track if one of the owners wants to relinquish their share, or the unforeseeable happens and an owner/s passes away. ...

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Intergenerational Transfers Affected by Changes to the Duties Act 2001 (Qld)
New transfer duty concessions will now be available for transferees, particularly in relation to intergenerational transfers of prescribed and primary production businesses, pursuant to the Queensland Government’s welcomed changes to the Duties Act 2001 (Qld) .
How does this affect eligibility?
Transfer duty concessions are now available for primary production businesses or prescribed businesses. A primary production business is a business of agriculture, pasturage or dairy farming. A prescribed business solely involves one of the following business activities:
- excavating and earthmoving
- picture framing
- gunsmithing
- locksmithing
- manufacturing
- processing and packaging
- printing and publishing
- boot and shoe repairing
- retailing and wholesaling (whether or not it involves repairing or installing goods sold)
- upholstering
- undertaking or funeral directing
- other (being beauty salon or barber shop, bus service, cinema, crematorium, engineering workshop, laundry or laundrette, newsagency, travel agency or real estate agency, repair and service workshop, rental business, restaurant or café, service station, sports complex or gymnasium, warehouse or bulk storage complex).
Concessions
If eligible, no transfer duty is payable if the business property carries on a primary production business. If residential land, which is adjacent to the land used to carry on a primary production business, is transferred under the same transaction then no transfer duty is payable. Unfortunately, transfer duty on water allocations still must be paid.
If the business is a prescribed business, transfer duty rate must be applied to any purchase. Here, transfer duty is payable on business property worth $500,000 or more. For example, if a property is worth $750,000, duty is payable on $250,000 (being the amount above $500,000). A list of transfer duty rates is available at the Queensland ...

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Body Corporate Management Case Study: The Most Expensive Balcony In Queensland?
The High Court has recently overturned a Queensland Court of Appeal decision to find in favour of a body corporate, which was fighting an owner’s attempt to use common property airspace to expand two balconies in his apartment.[i] The essential issue before the High Court was whether the body corporate had acted reasonably in refusing the owner’s request.

Always get advice from a reputable property lawyer if you face challenges with body corporate management.
Body corporate case study – background
An owner at Viridian Noosa Residences wanted to join his two existing balconies, and the space in between them, to create one deck. To do so, he required the exclusive use of common property airspace - 5m2 - between the two balconies.

To proceed with the extension, the owner needed a resolution without dissent at a general meeting of the Body Corporate. In August 2012, the owner put his motion at an extraordinary general meeting, however some lot owners voted against it.

The owner then applied to the Commissioner for Body Corporate & Community Management arguing that the Body Corporate acted unreasonably in voting against the motion. In September 2013, the Commissioner found that the Body Corporate had acted unreasonably and allowed the owner to proceed with the work.

In response to the Commissioner’s decision, two of the dissenting owners appealed the decision to the Queensland Civil and Administrative Tribunal (QCAT). In October 2014, QCAT overturned the Commissioner’s decision stating that the decision of the Commissioner’s had the effect of “overriding the will of a substantial majority of owners”.[i]

The owner appealed QCAT’s decision to the Queensland Court of Appeal who found, in November 2015, that the Commissioner’s decision was not wrong in law and QCAT should not have set it ...

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Australian Sellers Beware! 3 Things You Need To Know About The New Withholding Tax Regime
From 1 July 2016, new legislation requires Australian residents selling real estate and other assets with a market value of $2million or more to obtain a clearance certificate from the ATO by settlement. The aim of the new withholding tax regime is to protect the integrity of the foreign resident capital gains tax regime, by ensuring that foreign sellers do not escape their liability to pay capital gains tax.
What is the new law?
The new law applies to certain assets worth at least $2million, including:
• real property (land, buildings, residential and commercial property)
• lease premiums and mining, quarrying or prospecting rights
• indirect interests in an entity that hold such assets
• an option or right to acquire such assets.

Should each seller within a transaction fail to provide a valid clearance certificate by settlement, the buyer is required to withhold 10% of the purchase price which is payable to the ATO immediately after settlement.
How does it work?
At the crux of this new legislation is the requirement that anyone selling property or assets in this cost bracket must obtain a clearance certificate, which confirms that the withholding tax is not to be withheld from the transaction. A seller must apply to the ATO for a clearance certificate and provide it to the buyer by the settlement date of the transaction. A seller’s failure to meet this deadline will cause a deduction in the sale proceeds, as 10% of the purchase price will be paid to the ATO.

A seller may apply for a clearance certificate at any time they are considering the sale of property, even before the property is listed for sale. The clearance certificate will be valid for 12 months and must be valid at the time the certificate is given to the buyer prior to settlement.

There are a number of forms, in relation to the clearance certificate, which are available from the ATO’s ...

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