Stamp Duty and Other Considerations

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Limited Recourse Borrowing Arrangement (LRBA) Stamp Duty & Other Considerations

SMSF Stamp DutyDetails matter.  In relation to the application of ad valorem stamp duty (based on the value of the property) on the purchase of a property by a Self-Managed Superannuation Fund (SMSF) which is subject to a LRBA there are three taxing points being:

  1. Purchase of the property
  2. On establishment of the bare trust deed (holding or custodian trust deed)
  3. Transfer of the property from the bare trustee back to the SMSF trustee

Each State varies as to its requirements concerning the dating of bare trusts relative to contracts and the name of the Purchaser on a contract for sale of land. Where these requirements are not met, the limited recourse borrowing arrangement may be subject to double, or even triple, stamp duty or ineligibility to access concessional or reduced duty.

The timing and way in which the following are undertaken are vital in this process.

  • Timing of the purchase contract vs the signing of the bare trust deed
  • Purchaser named on the contract
  • The purchase money, including the deposit, must be paid by the SMSF
  • Relevant records should be retained as audit evidence
n.b there is no superannuation legislation which requires the transfer of the property from the custodian (bare trustee) to the SMSF trustee when the loan is fully repaid.  However, the property remains subject to the restrictions under the LRBA whilst it continues to be held by the custodian.  This would be problematic for example if vacant land was the asset subject to the LRBA and the SMSF trustee wanted to develop it after the loan was repaid.  In this situation the title must be transferred to the SMSF trustee or the LRBA rules would be breached with serious consequences.

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If you’re interested in learning more about LRBA or Stamp Duty please reach out to us. Simply submit your details and one of our friendly team will be in touch as soon as possible.

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NSW
VIC
QLD
WA
SA
TAS
ACT
NT

See the different stamping requirements for each state

State NSW
Stamping Requirements Requires to be stamped within 3 months of execution of the bare trust
Duty $750
Link to State/territory Duties Act 1997 No 123 – NSW legislation
Refer to S 8 and S 62B
Superannuation trust: section 62B | Revenue NSW
Purchase contract exchange prior to bare trust deed execution Yes
Execution of bare trust deed After Exchange of contract – have up to 3 months to get it stamped (can be executed post settlement)
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
State VIC
Stamping Requirements Requires to be stamped within 30 days of execution of the bare trust- A copy of the bare trust deed and declaring the deed was executed in Victoria
Duty Nil
Link to State/territory DUTIES ACT 2000 (austlii.edu.au)
Refer to s7(1)(b)(i) and s34(1)(a)(i)
Limited recourse borrowing arrangements (custodian trusts and holding trusts) | State Revenue Office (sro.vic.gov.au)
Purchase contract exchange prior to bare trust deed execution The purchase contract or the bare trust can be executed in any order
Execution of bare trust deed After Exchange of contract and before settlement but within 30 days of execution
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
State QLD
Stamping Requirements Not required to be stamped- Self assessment – online
Duty Nil
Link to State/territory DUTIES ACT 2001 – As at 1 July 2023 – Act 71 of 2001 (austlii.edu.au)
Refer to ss 9 and 66
Transfer by direction to superannuation custodian exemption (s.130A) toolkit – Queensland Revenue Office (qro.qld.gov.au)
Purchase contract exchange prior to bare trust deed execution No
Execution of bare trust deed Before exchange of the purchase contract
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX as trustee [Name of Bare Trust]
State WA
Stamping Requirements Required to be stamped – Self assessment
Duty $20
Link to State/territory Duties Act 2008 – [03-i0-03].pdf (legislation.wa.gov.au)
Refer to S11 and S117 and S118 of the Duties Act & Schedule 2 Div 3 (rates)
Nominal transfer duty (www.wa.gov.au)
Purchase contract exchange prior to bare trust deed execution The purchase contract or the bare trust can be executed in any order. However, as the name of the trust is included in the title it should be before or on the date of the contract
Execution of bare trust deed After Exchange of contract and before settlement
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
State SA
Stamping Requirements Not required to be stamped – Self assessment
Duty Nil
Link to State/territory Stamp Duties Act 1923 (legislation.sa.gov.au)
Refer to s71(3) and s71(7a)
SDDGAC.pdf (revenuesa.sa.gov.au)
Refer to Declaration of Trust over land
Purchase contract exchange prior to bare trust deed execution No
Execution of bare trust deed After Exchange of contract and before settlement
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
State TAS
Stamping Requirements Requires to be stamped within 90 days of the execution of the bare trust
Duty $50
Link to State/territory act-2001-015 (legislation.tas.gov.au)
Refer to S16(4) and 39(1)(a)
Limited recourse borrowing arrangements | State Revenue Office Tasmania (sro.tas.gov.au)
Purchase contract exchange prior to bare trust deed execution Yes
Execution of bare trust deed After Exchange of contract
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX
State ACT
Stamping Requirements Not required to be stamped
Duty Nil
Link to State/territory DUTIES ACT 1999 (austlii.edu.au)
Refer to S7 and 56
Property vested in apparent purchaser | ACT Revenue Office – Website
Purchase contract exchange prior to bare trust deed execution Yes
Execution of bare trust deed After Exchange of contract
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
State NT
Stamping Requirements Requires to be stamped within 60 days of execution
Duty $20
Link to State/territory STAMP DUTY ACT 1978 (austlii.edu.au)
Refer to s56BA and item 1, Sch 1
Examples of duty and rates | NT.GOV.AU
Purchase contract exchange prior to bare trust deed execution No
Execution of bare trust deed Before exchange of the purchase contract
Purchaser named on the Contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX as trustee [Name of Bare Trust] as bare trustee for [SMSF Trustee] as trustee for [Name of SMSF] ABN XXX XXX XXX

NSW
VIC
QLD
TAS
SA
ACT
NT
State Stamping Requirements Duty Link to State/territory Purchase contract exchange prior to bare trust deed execution Execution of bare trust deed Purchaser named on the Contract
NSW Requires to be stamped within 3 months of execution of the bare trust $750 Duties Act 1997 No 123 – NSW legislation
Refer to S 8 and S 62B
Superannuation trust: section 62B | Revenue NSW		 Yes After Exchange of contract – have up to 3 months to get it stamped (can be executed post settlement) [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
VIC Requires to be stamped within 30 days of execution of the bare trust- A copy of the bare trust deed and declaring the deed was executed in Victoria Nil DUTIES ACT 2000 (austlii.edu.au)
Refer to s7(1)(b)(i) and s34(1)(a)(i)
Limited recourse borrowing arrangements (custodian trusts and holding trusts) | State Revenue Office (sro.vic.gov.au)		 The purchase contract or the bare trust can be executed in any order After Exchange of contract and before settlement but within 30 days of execution [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
QLD Not required to be stamped- Self assessment – online Nil DUTIES ACT 2001 – As at 1 July 2023 – Act 71 of 2001 (austlii.edu.au)
Refer to ss 9 and 66
Transfer by direction to superannuation custodian exemption (s.130A) toolkit – Queensland Revenue Office (qro.qld.gov.au)		 No Before exchange of the purchase contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX as trustee [Name of Bare Trust]
WA Required to be stamped – Self assessment $20 Duties Act 2008 – [03-i0-03].pdf (legislation.wa.gov.au)
Refer to S11 and S117 and S118 of the Duties Act & Schedule 2 Div 3 (rates)
Nominal transfer duty (www.wa.gov.au)		 The purchase contract or the bare trust can be executed in any order. However, as the name of the trust is included in the title it should be before or on the date of the contract Before or on the Exchange of contract – have up to two months to stamp [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX as trustee [Name of Bare Trust]
SA Not required to be stamped – Self assessment Nil Stamp Duties Act 1923 (legislation.sa.gov.au)
Refer to s71(3) and s71(7a)
SDDGAC.pdf (revenuesa.sa.gov.au)
Refer to Declaration of Trust over land		 Yes After Exchange of contract and before settlement [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
TAS Requires to be stamped within 90 days of the execution of the bare trust act-2001-015 (legislation.tas.gov.au)
Refer to S16(4) and 39(1)(a)
Limited recourse borrowing arrangements | State Revenue Office Tasmania (sro.tas.gov.au)		 Yes After Exchange of contract Bare Trustee Name] Pty Ltd ACN XXX XXX XXX
ACT Not required to be stamped Nil DUTIES ACT 1999 (austlii.edu.au)
Refer to S7 and 56
Property vested in apparent purchaser | ACT Revenue Office – Website		 Yes After Exchange of contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX– the bare trust can be named but not required
NT Requires to be stamped within 60 days of execution STAMP DUTY ACT 1978 (austlii.edu.au)
Refer to s56BA and item 1, Sch 1
Examples of duty and rates | NT.GOV.AU		 No Before exchange of the purchase contract [Bare Trustee Name] Pty Ltd ACN XXX XXX XXX as trustee [Name of Bare Trust] as bare trustee for [SMSF Trustee] as trustee for [Name of SMSF] ABN XXX XXX XXX

Warning – check with a conveyancer to ensure the title is correctly identified in the contract in accordance with local state laws.

Use of “Nominee” on the purchase contract -Although it may still be legally binding in some states (Victoria for example) where “or nominee” is used on a contract to purchase property, it is not in others (such as Queensland).

 Exchange of contract – It is when the contract becomes legally binding.  The purchase contract is signed and exchanged between the buyer and the seller committing both parties to the terms of the contract.

Bare Trustee Company – ensure this is incorporated prior to entering into any contract of purchase and executing the bare trust deed.

The Bare Trustee can be a related company or other related party including a member.  It is not required to be a company but, generally, it is best practice to be established as a stand alone corporate trustee to ensure clear title compared to other SMSF assets and personal assets of the members as well as better legal protection. Some lending institutions may require a corporate trustee.

Do you want to learn more about LRBA or Stamp Duty?

Give us a call on 1300 392 544 or get in touch online.

Contact Us

If you’re interested in learning more about LRBA or Stamp Duty please reach out to us. Simply submit your details and one of our friendly team will be in touch as soon as possible.

Contact Us

Name(Required)

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