Family farm transfer duty concession extended

WHO SHOULD READ THIS

• Those who hold property in Queensland that is used for primary production.

THINGS YOU NEED TO KNOW

• The Queensland State budget announced that duty concession on transfers of family farms will be extended further than by way of gift, but under certain conditions.

WHAT YOU NEED TO DO

• Those looking to take advantage of these new rules should seek specialist duty advice if considering transferring primary production property amongst family members in order to review eligibility for the concession to ensure the best possible duty outcome.

As part of the budget this week, Treasurer Curtis Pitt announced that the Rural Assistance Package will extend the duty concession on transfers of family farms to transactions other than by way of gift.

The Rural Assistance Package is a total of $36 million over five years from the 2016 financial year, designed to assist rural producers across Queensland affected by debt and drought.

Under the exemption as it currently stands, no duty is payable on the transfer of business property (farm land and associated goods) between members of a family to the extent that the transfer is by way of a gift. In practice, this has significantly limited the availability of this exemption.

However, from 1 July 2016 the amendment proposed under the Duties and Other Legislation Amendment Bill 2016 (Qld) will remove the requirement that the transfer be by way of gift. Under the package, the exemption will now be available for any transfer of ‘business property’ where:

• the transferor, or person directing the transfer, is a defined relative of the transferee
• the transferee takes the transfer in their personal capacity (i.e. not as trustee)
• the business for which the business property is used is carried on by the defined relative (whether alone or with others), and
• the business is intended to be carried on by the transferee (whether alone or with others).

‘Business property’ is defined to include land primarily used to carry on a business of primary production and personal property used to carry on the business on the land. ‘Personal property’ covers goods such as plant and equipment and livestock, but does not extend to other business assets such as business names, water entitlements, brands or debtors.

The exemption is also available:

• in circumstances where the business property to be transferred is owned by a company or trust, so long as the person directing the transfer is a defined relative (effectively the extended family) of the transferee
• for certain transfers of interests in family farming partnerships and unit trusts, and
• for certain acquisitions of shares in companies that hold family farms.

Those looking to take advantage of these new rules should seek specialist duty advice if considering transferring primary production property amongst family members in order to review eligibility for the concession to ensure the best possible duty outcome.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.