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 and any amendments to the deed (or stamped copies if executed before 1 July 2008)
4. A copy of either:
   • the duty endorsed agreement from when the property was originally acquired by the trust, such as a contract for sale or
   • a duty endorsed declaration of trust made by the trustee declaring the property is a trust asset.
5. If item 4 is not available, provide:
   • the date the property was acquired by the trust
   • evidence showing the property is a trust asset, such as declarations of trust, trustee’s minutes, financial statements, evidence of payment for the property by the trust, etc and
   • if the original acquisition was on or after 1 January 2019, evidence that foreign buyer duty was paid if the trust is a foreign trust.
6. Complete financial statements of the trust immediately before the transaction and at the previous 30 June. If you can’t provide the former, advise of any significant variations between the two dates.
7. Details of any liabilities that are being taken over under the transaction.
8. Details of any debts that are released or extinguished under the transaction.
9. Confirm if the beneficiary intends to hold the property as agent, trustee or otherwise on behalf of someone else.
10. Confirm if the beneficiary is a member of a class of beneficiaries of the trust, if they fell into that class when the property was acquired and the date they became a member of that class of beneficiaries.
11. The specific clause(s) of the trust deed giving the trustee power to appoint the property to a beneficiary.
12. Any other information that may assist us to assess the 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 a deed of variation).
2. A copy of the trust deed and any variations to the deed.
3. Complete financial statements of the trust at the date of the transaction or at the previous 30 June.
4. If the trust holds an interest in a linked entity entitled to dutiable property, provide complete financial statements of the entity at the date of the transaction or at the previous 30 June.
   The trust holds an interest in a linked entity if the trustee:
   • holds a 90% or greater interest in a listed corporation or a listed unit trust scheme
   • holds a 50% or greater interest in an unlisted corporation or an unlisted unit trust scheme
   • is a potential beneficiary of another discretionary trust or
   • is a partner in a partnership and contributes at least 50% of the capital of that partnership or is required to bear at least 50% of the losses of that partnership.
5. Details of the amount of any consideration being given.
6. Details of any liabilities taken over under the transaction.
7. Details of any debts released or extinguished under the transaction.
8. Details of the percentage of trust income and property that the taker in default would receive in default of an appointment by the trustee.
9. If the trust owns land, complete either Form FDA27 ‘Duties Valuation – City, Town and Suburban Property’ or Form FDA28 ‘Duties Valuation – Country Land’. These forms are not required if lodging electronically.
   You don’t need to provide a valuation form if you provide a valuation by a qualified valuer described in Commissioner’s Practice TAA 30 ‘Valuation of Land for Duties Purposes’.
   You will also need to complete a Form FDA41 ‘Foreign Transfer Duty Declaration’.
10. Any other information that may assist us to assess the 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 and any amendments.
4. A copy of the duty endorsed transaction record (such as an agreement) when the property was originally acquired. If you don’t have this and the transaction relates to residential property transferred, or agreed to be transferred, to a foreign person, provide:
   • evidence of the date of the original acquisition of the property and
   • if acquired after 1 January 2019, evidence that foreign transfer duty was paid.
5. If the duty endorsed transaction record is not available – evidence that the property is being held on trust including declarations of trust, trustee’s minutes, financial statements, evidence of payment for the property by the trust, etc.
6. Complete financial statements of the trust at the date immediately before the transaction and at the previous 30 June. If the financial statements at the date immediately before the transaction have not been prepared, provide details of any changes to the financials between this date and the previous 30 June.
7. Details of any liabilities taken over under the transaction.
8. Details of any debts released or extinguished under the transaction.
9. Confirm if the beneficiary will hold the property as agent, trustee or on behalf of any other person.
10. The clause(s) of the trust deed that relates to the distribution of the trust’s property upon a vesting or termination of the trust.
11. Confirm how the person receiving the property is a taker in default e.g. family relationship.
12. Any other information that may assist us to assess the duty.

Forms

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

Publications

• Fact Sheet ‘Foreign Transfer Duty