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How to clone a DT and land tax impact

Discussion in 'Accounting, Tax & Legal' started by salsa, 9th Jan, 2007.

  1. salsa

    salsa Well-Known Member

    Joined:
    23rd Oct, 2005
    Posts:
    49
    Location:
    Brisbane
    I have a query hope Nick or Nigel could help.
    I have 2 IPs in one Disc Trust. I wish to clone the trust and put one IP in each trust. I am in Qld.

    1./Company Trustee and Beneficiary List will be exactly the same so I guess no capital gain tax or stamp duty incurred ?
    2./Is this to be done by an accountant or a solicitor ? (I had the trust done via an accountant)
    3./ How would the land tax threshhold apply in this case ? per each trust or still on combined values from the 2 trusts ? Is there anyway I could use this opportunity to reduce land tax for example changing trustee after cloning ?

    Thank you for any thoughts.
     
  2. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    Hi Salsa

    Sorry for delay in responding. I'm going to have to ask you to be patient...I will respond in detail, just can't do so now.

    In the interim check out this old post if you haven't already done so... http://www.invested.com.au/4/split-trust-314/

    Also, for bedtime reading, here's the ATO's view

    Are your properties also in Qld?

    N.
     
    Last edited by a moderator: 10th Jan, 2007
  3. salsa

    salsa Well-Known Member

    Joined:
    23rd Oct, 2005
    Posts:
    49
    Location:
    Brisbane
    Thank you Nigel I will read those as you have suggested.
    And yes the IPs are in Bris.
     
  4. NickM

    NickM Co-founder Staff Member

    Joined:
    20th Jun, 2005
    Posts:
    321
    Location:
    Sydney
    Hi Salsa
    This is certainly a legal issue. Your accountant may be able to guide you but the lawyer will need to create and implement the mirror / clone trust.

    Allan Swan has a good rep in this area of law. I am unsure of his pricing and you may wish to ask around.
    Moores Legal - Philip Curtis

    My understanding is that it is not tax effective to move property out as st duty could apply. The examples i have seen move a share portfolio out into a cloned trust and leave the Ip in the original trust.

    If this is the case (which i think it is) then you have to really look at why you want to move the IP in the first place. what do you want to achieve and is there another way.

    NickM
     
  5. salsa

    salsa Well-Known Member

    Joined:
    23rd Oct, 2005
    Posts:
    49
    Location:
    Brisbane
    Thanks for your reply Nick. I am talking cloning trust not just moving IPs out of a trust, it seems that no stamps duty incurred in cloning case (see link in Nigel's post above). Nigel ??
    I am hoping for some information on how land tax would apply after cloning & putting one IP in each cloned-trust. Still waiting for Nigel, patiently.
    Thanks.
     
  6. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    I don't think there's any land tax saving because by virtue of the cloning the beneficiaries must be the same. The threshold for trusts is $300k in Qld. $500k for individuals.

    See:
    section 26A
    http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/L/LandTaxA15.pdf

    and
    reg 18
    http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/L/LandTaxR99.pdf

    and

    http://www.osr.qld.gov.au/legislation/prac_directions/landtax/pdlt007-1.pdf
     
  7. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    Merely changing trustees with no change in beneficiaries should not incur stamp duty in qld. See:

    Section 117

    http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/D/DutiesA01.pdf

    and

    http://www.osr.qld.gov.au/legislation/rev_rulings/duties/rrda011-1.pdf

    Cheers
    N.