Save $6,500 on your Land Tax Bill
Convert a Hybrid Discretionary Trust / Discretionary Trust to a Land Tax Unit Trust
Many people have setup a hybrid discretionary trust and the State Revenue Offices have now deemed a hybrid discretionary trust to not be a fixed trust and therefore many people are asking whether to convert their discretionary trust, hybrid discretionary trust or unit trust to a Land Tax Unit Trust.
The Office of State Revenue has confirmed that following a decision in the Full Federal Court that the conversion of a discretionary trust/hybrid discretionary trust and unit trust to a fixed unit trust will not attract a liability to stamp duty. Previously this was not the case and full stamp duty would apply to such a change. At the same time the Australian Taxation Office has issued a ruling stating that capital gains tax will not apply to any conversion as long as it is within the powers of the Trustee.
Many property investors have become concerned about the escalating costs of land tax, especially where there is no threshold as in the case of a discretionary trust, hybrid discretionary trust and unit trusts. The threshold for the 2013 year which applies to property held at midnight on 31 December 2012 is $406,000.00 for NSW property. That’s a potential saving of up to $6,500.00 per annum.
Other benefits including stamp duty savings as well as being able to sell the units, under certain circumstances, to a self-managed superfund are also available.
House of Wealth Accounting can assist with the conversion of a discretionary trust, hybrid discretionary trust or a unit trust to a land tax unit trust in either NSW or Victoria. We have offices in Sydney and Melbourne and so if this is of interest then please give us a call.
We have a team of property accountants who have been specialising in property accounting and taxation issues for property investors and property developers for many years. If you are a property investor and want to ensure you maximise your investment property deductions then give us a call.