Charitable trustees’ declarations
From 11 May 2022 the Duties Act 1997 (NSW) has introduced Section 8AA which brings significant changes to the NSW stamp duty regime; and an imposition of duty on the acknowledgement of trusts.
Duty will be charged on the making of a statement that:
- appears to be a declaration of trust over dutiable property, but
- merely has the effect of acknowledging that identified property vested, or to be vested, in the person making the statement is already held, or to be held, in trust for a person or purpose mentioned in the statement.
The Commissioner is yet to publish any ruling or guidance on how section 8AA is to be interpreted. However, it is assumed that the evil the Commissioner is attempting to eliminate is the acquisition of dutiable property effected where there is a change in trustee, (which is normally stampable, with nominal duty of $50.00), but followed by the winding up of the trust and a vesting in the new trustee of the dutiable property.
Charitable trusts would not normally be affected by such transactions because the property held by them cannot vest in their trustees.
Notwithstanding that general principle, the wording in section 8AA will deem that a transfer of dutiable property has occurred if either existing or new trustees reduce to writing “acknowledgement” that a trust has always existed in fact: or, on becoming new trustees “declare” that they will continue to hold property in the trust as trustee.
Additionally, if the documents appointing new trustees identify the relevant property in New South Wales held by the trust, or identify persons or “purposes” for which the property is held, then the deed appointing those new trustees is classified as a transfer of dutiable property.
It is now recommended that before any deed appointing new trustees is signed, practitioners obtain a private ruling from the Commissioner or await the Commissioner’s general ruling. Provided the ruling is clear and decisive, the practitioner should proceed strictly according to its guidance.