Join our investing community

Trust Deed - Can it leave its State of Origin?

Discussion in 'Accounting, Tax & Legal' started by austing, 7th Aug, 2007.

  1. austing

    austing Well-Known Member

    Joined:
    5th Jun, 2006
    Posts:
    386
    Location:
    north maleny
    Hi Gang,

    Another trust question.

    Nick Renton states in his "Family Trust" book that the original Trust Deed should never leave the State it was created in or there can be serious stamp duty implications etc. Surely Trust Deeds get moved to other States at times with owners of the Trust Deed moving interstate and/or using different advisors or accountants who are in another state.

    Does anyone know if what Renton states is still valid nowadays?

    Cheers - Gordon
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    I don't think it means much in practical terms - doesn't matter where your trust was drawn up, it is valid no matter where you reside. Example - my trust was from the ACT, but my accountant and I are both in NSW. I'll let Nick comment on any other implications there may be.

    Just as an aside, I had a bit of a scare earlier this year when I went looking for the "stamped" copy (ie evidence of stamp duty being paid on the trust deed), only to discover that my previous accounting firm (in ACT) hadn't forwarded it on to my new accountant with the rest of my documentation.

    I was literally within days of having the trust re-stamped (in ACT, only about $100 - $200 including "late" penalties since the trust is nearly 6 years old now), when (months after the original request) a stamped copy of the trust deed magically appeared in the mail for my new accountant !! *phew*
     
  3. austing

    austing Well-Known Member

    Joined:
    5th Jun, 2006
    Posts:
    386
    Location:
    north maleny
    Hi Sim,

    Thanks for your reply.

    I'm really perplexed by what Renton says. I wonder if he just means Stamp Duty on the Deed? One of our deeds originated in Victoria where we purchased a Melbourne IP as the first asset in the trust. The next IP was purchased in QLD and a copy of the deed had to be sent to the relevant QLD gov't department for registration. However there is not stamp duty on trust deeds in QLD anymore.

    In relation to lost Deeds well NAB lost our second stamped copy when they needed to Vet it prior to purchasing the QLD property. I then had to get the accountant to copy the only other stamped original and certify it as a true copy. No way was NAB getting the only remaining original stamped copy.

    Cheers - Gordon
     
  4. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    No longer true. The answer lies in looking at the various state and territories duties legislation and seeing what are dutiable transactions.

    In Qld for example, trust deeds are not required to be stamped at all...see the following from OSR's practice direction DA61.1

    So how does taking say a NSW trust deed which has been nominally stamped for $200 into Qld cause catastrophic stamp duty problems?

    Note that SA and WA have fairly archaic legislation so it would require some closer examination.

    As a general principle what's required is:

    a) a dutiable transaction; and
    b) a nexus or connection with the state or territory.

    There are some tricks and traps around some mortgage duty structures which involve memos of deposit which require physical location of documents and similarly some loan note structures where location of the register is important...but those are not relevant here (and given the phasing out of mortgage duty will not be relevant for too much longer - thank goodness!) BUT I digress...

    Cheers
    N
     
  5. austing

    austing Well-Known Member

    Joined:
    5th Jun, 2006
    Posts:
    386
    Location:
    north maleny
    Hey Nigel,

    Fantastic post and just what I was looking for.

    Actually I just found this on Renton's website and it also appears in his latest 2007 (4 edn) of his Family Trust book:

    " TRUSTEES MOVING INTERSTATE
    Q. My wife and I are trustees of a family trust and at the end of the year we will move from NSW to the ACT to live. In one of your books you wrote: "A trust deed should on no account ever be sent outside the State in which it was created without proper advice. Such an action could make an established trust subject to substantial additional stamp duties." You also advised leaving the original trust deed in the State of its registration and taking a copy only for administrative purposes.
    Are there any other implications for the Trust apart from having to leave the original deed in NSW?
    A. Probably not, apart from the obvious one of notifying various parties such as share registrars, titles office, ATO and land tax authorities of the change of address."

    So it would seem this is no longer correct.

    Cheers - Gordon