Creating and terminating trusts
A trust is created when you hold property:
- in your own name and then start to hold the property as trustee
- on trust and then start to hold that same property as trustee for a different trust.
A trust is terminated when you cease holding property as trustee and start holding it in your own right.
Trusts that are created or terminated over dutiable property are liable for duty. Any documents that evidence these transactions must be stamped.
Duty is calculated on the value of the dutiable property over which the trust has been created or terminated.
Natalie owns a commercial building in her own name. She is also the trustee of her own discretionary family trust. She decides to start holding the commercial building in her capacity as trustee for the family trust.
This is a trust creation, and transfer duty is payable.
Jacob and Candice own a residential unit as trustees for their superannuation fund. They are also the sole beneficiaries of the fund. They have reached retirement age and are now transferring the title of the property into their own names so the property is no longer subject to the trust.
This change of ownership is a trust termination because the trustees have stopped holding the property as trustees and started owning it in their own right. Transfer duty is payable on this transaction. As this is a trust termination and not a transfer, a home concession is not available.
When lodging the documents for stamping, include:
- the trust deed
- any original agreements or transfers
- a dutiable transaction statement (Form D2.2)
- an identity details annexure for each non-Australian transferor and transferee, when transferring real property held by the trust into the name of the new trustee
- evidence of value of the property on which the trust is settled or terminated
- a covering letter outlining the documents you have lodged, your name and return address.
Read more about lodging and stamping documents.
Trusts created without dutiable property
You’re not liable for duty when you create a trust by declaration or settlement of cash only. This is because the transaction doesn’t involve dutiable property. Similarly, no duty is payable when you establish a superannuation fund without any dutiable property.
Trust documents showing the creation of a trust or superannuation fund that commenced before 1 March 2002 must be lodged for stamping even if they were not created over dutiable property.