Land tax & trusts

Most trusts in NSW start paying land tax with no threshold. Check the osr.nsw.gov.au website

in NSW most trusts don't get any land tax free threshold.

"Exceptions" for fixed trusts, SMSFs and deceased estates.

HI Waz,

Don't know your personal situation. Nor do I know the land tax rates in NSW but ……………………………..

I don't think you should be making your decision solely based on possible land tax bills.

Trusts are primarily designed as a means of protecting assets. This should be your primary consideration and not teh size of the bill.

Asset protection should not necessarily be your sole determinant. Other factors such as estate planning, distribution of income, no. of properties that you intend to own, the risk of getting sued should all be considered.

Off the top of my head, there is a land tax threshold in QLD for trusts. Once you hit the threshold start a new trust and get a new threshold.
Vic is similar to NSW, if fixed unit trust then individuals get the threshold. There is no threshold, or very small for non fixed trusts. In Tassie I am not sure but one of my trusts was paying land tax – the amount was too small to force me to look at the relevant act to find out the rules.

Hi Waz and All

Re: Unit Trusts and Land Tax

If you have the correct documents you can gain the land tax Threshold in NSW and in other states as they all have similar rules.

It is based on facts not opinions as the recent case below illustrates. Remember also that land tax paid under state law is a deuctible expense unedr federal law so it gets discounted.  

In a recent decision (Chief Commissioner of State Revenue v. Sayden Pty Ltd ATF Griffin Property Unit Trust (RD) [2012] NSWADTAP 14) the Appeal Panel of the NSW Administrative Decisions Tribunal held that a clause inserted into a unit trust deed seeking to make the trust a fixed trust for land tax purposes (a "fixed trust clause") by mirroring the relevant section (section 3A(3B)) in the Land Tax Management Act 1956 (NSW) was ineffective. This was because there were a number of other clauses in the trust deed that were not amended and were held to be inconsistent with the trust being a fixed trust. This is despite the fact that the relevant fixed trust clause purported to override everything else in the trust deed.

Another benefit of buying this way is that you allow your SMSF to acquire units in the trust later you can use SMSF money to use the trust for other properties.

You cannot do this if it is in your personal names.

You can also use SMSF or UT borrowing to buy units if it is set up correctly – we have been doing this for clients for over 20 years without problems.

It all depends on the set up – remember the ATO has a current ruling ID 2002/388 that allows you to live in a property owned by a unit trust – SMSF structure provided you pay market rental. We have correspondence from the ATO in 2003 and 2008 which confirms their ruling.

Planning and structure can determine whether you reach your goals.

Regards to ALL

Anthony