24/07/2013

There have been changes to the duties law in Queensland that will affect an SMSF purchasing property in QLD through a limited recourse borrowing arrangement ('LRBA').

On 12 June this year the QLD Duties Act was amended.  The amendments apply retrospectively from 26 October 2011 – no, not a misprint – 2011.

The change impacts the purchase of QLD property using an LRBA, including purchases 'off the plan'.  The changes are positive for SMSF trustees.  They remove any confusion as to how to apply for the concessional duty on the transfer of the property by the holding trustee back to the fund following repayment of the loan.

The legislative changes clarify that instead of relying upon the 'Nominee Agreements under Agency Relationships' (the so-called 'apparent purchaser' provisions) QLD has now legislated to provide specifically for transfers of property in relation to superannuation trustees and holding trustees (ie custodians or bare trustees etc).

The new s130B of the QLD Duties Act clearly outlines the requirements to apply for an exemption from state duty when transferring property from a holding trustee to a fund trustee.  It provides that transfer duty will not be imposed on transfers from:
 
•    a trustee to a custodian; or
•    a custodian to a trustee

where the property continues to be property of the super fund and the member's interest in the property doesn't change after the transfer has been completed.

The super fund also needs to show that it has elected to be a regulated fund and the transaction has otherwise complied with the requirements of the SIS Act.

The change in legislation doesn't close the door on using the previous 'apparent purchaser' method which involved proof (and recognition by the QLD Duties Office) of an agency relationship between the fund and the holding trustee.  However the new legislation is clearly a much easier alternative in that it is targeted specifically at LRBA transfers.  The prior method was not expressly drafted for superannuation transactions of this nature.

There is no restriction relating to when the property was initially purchased by the custodian/holding trustee. The new legislation applies to any repayment of the loan occurring since 26 October 2011.  

If you have an LRBA which is coming up for final repayment you will need to consider the 5 different alternatives that the fund is now facing.  To learn about those 5 alternatives please contact our specialist team at Townsends Business & Corporate Lawyers on (02) 8296 6222.