The Duties Act, 1997 (NSW) provides that full ad valorem stamp duty is payable on a “Declaration of Trust”.

Double stamp duty can be avoided, however, if the exemption under Section 55 of the Duties Act, 1997, applies regarding “apparent purchasers” and “real purchasers”.

Date of the Bare Trust Deed –

The reason for requiring the date of the Bare Trust Deed to be dated after the date of the exchange of contracts arises from the decision of the NSW Court of Appeal in Chief Commissioner of State Revenue v Platinum Management Pty Ltd [2011] NSWCA 48.

In that case, the Court of Appeal held –

• Pursuant to Section 8 of the Duties Act, 1997, full ad valorem stamp duty is payable on the dutiable value of the property which is the subject of a declaration of trust;
• Pursuant to Section 9 of the Duties Act, 1997, a declaration of trust can be made in respect of future property or, in the words of the section, property  “vested or to be vested in the declarant”;
• Pursuant to Section 55 of the Duties Act, 1997, only “nominal” stamp duty (currently $500.00 – see Section 62B of the Duties Act) is payable –
• on a declaration of trust made by an “apparent purchaser”
• in respect of “identifiable dutiable property”
• vested or to be vested in the “apparent purchaser”
• upon trust for the “real purchaser” who provided the money for the purchase of the dutiable property
• provided that the Chief Commissioner is satisfied that the money for the purchase of the dutiable property was provided by the real purchaser (the Bare Trustee being the “apparent purchaser” and the Superannuation Trustee being the “real purchaser”);

• In accordance with the above decision, the “apparent purchaser” concession from full ad valorem stamp duty is not available unless the identified dutiable property “is vested” (ie past tense), and the real purchaser has (past tense) “provided the money for the purchase of the dutiable property”.
• Unless the requirements of paragraph (d) above are present, then full stamp duty is payable both on the contract for the purchase of the property and also upon the declaration of trust – in other words, double stamp duty is payable.
• To avoid double stamp duty being payable, for the reasons set out in paragraph (d) above, the declaration of trust must be dated after the date of the contract.
• A declaration of trust for future acquired property, although permissible in trust law, will not attract the exemption from full ad valorem stamp duty provided for in Section 55.

If you need advice regarding a Bare Trust, Call Geoff Brazel now for a free confidential chat on the phone to find out where you stand.