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Land tax problems with hybrid and discretionary trusts

16 May 2013

There's a push by promoters to convert property owning hybrid and discretionary trusts to unit trusts so as to avoid denial of the land tax free threshold to such trusts as "special trusts". The ones we have seen seemingly rely on DUT 17 for stamp duty relief and TD 2012/21 for CGT. But those contemplating the exercise should consider:

• whether CGT event E5 might apply (as TD 2012/21 only applies to CGT events E1 and E2),
• if CGT event E5 does not apply the need to avoid the new units, if nothing is paid for them, having a nil cost base (see section 112-20 ITAA 1997), and
• the land rich provisions under the Duties Act for properties valued at $2 million or above. 
 
If you would like further information please contact Jim Main on 02 6942 1655 or email Jim Main

 

Jim Main Business Lawyer / Director

Jim Main practices in business law generally with an emphasis on business succession, estate planning and tax. Jim has a Diploma in Law, is a.. Learn more about Jim Main

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