Families on the land will be able to transfer ownership of land and certain other assets between family members without paying transfer duty in a much broader range of circumstances from 1 July 2016.
Transfer duty, which is a calculated on a sliding scale up to 5.75% of unencumbered value, is significant impost on transfers of land and other business assets in Queensland. Primary producers are disproportionately affected by this form of tax given the value of the land and other dutiable property they must acquire to generate relatively modest returns.
An important concession has historically been allowed for gifts of rural property to children or grandchildren with the result that duty was imposed on only the actual price paid (if any) and liabilities assumed (if any) irrespective of the value of the property. This concession was extended by the previous Queensland Government. Since 1 July 2014, the recipient of the property has not needed to be a direct lineal descendant of the transferor and instead can be a spouse, parent, grandparent, sibling, aunt, uncle, niece or nephew. However, the concession still only applied to the extent the transfer was your way of a gift.
In conjunction with the 2016 Queensland Budget, legislation has been introduced to Parliament that will extend and simplify the concession significantly. From 1 July 2016, the gift requirement will be removed meaning that, provided the other requirements are met, no duty will be payable even where the recipient of the property pays for it or assumes debt in conjunction with the transfer.
For example, where a family member takes over their relative’s mortgage debt at the same time as the property and meets the requirements for the concession, duty will no longer be assessed on the value of that debt. Where that debt is say $2,000,000, the duty saving will be $95,525.
Similar duty concessions are applicable to transfers of partnership interests, shares in landholding companies and units in particular family unit trusts.
The Government is to be commended for recognising the importance of tax-effective pathways for succession planning on Queensland’s farms, approximately 99% of which continue to be family owned and operated.
Thynne + Macartney’s agribusiness lawyers help their clients develop and implement succession plans that maximise eligibility for duty concessions.
This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.