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Chapters

  1. Overview
  2. Change in beneficial ownership of dutiable property
  3. Change in beneficial ownership of dutiable property - Regulation
  4. Change in beneficial ownership - Grant of an Option
  5. Acknowledgement of trust
  6. Off the plan transactions
  7. Breakup of marriages and de facto relationships
  8. Transfer of certain business property between family members
  9. Surcharge purchaser duty Australian-based developer
  10. Tax avoidance schemes
  11. Other changes to the Taxation Administration Act 1996
  12. Land Tax
  13. First Home Owner Grant
  14. Other legislative changes

5. Acknowledgement of trust

Section 8AA of the Duties Act 1997

This amendment charges duty on the making of a statement that 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.

This is in response to a recent Supreme Court decision Benidorm Pty Ltd v Chief Commissioner of Revenue [2020] NSWSC 471 which narrowed the scope of the declaration of trust charging provisions. That decision held that the definition of “declaration of trust” in subsection 8(3) of the Duties Act 1997 does not encompass mere acknowledgments of existing trusts. That is, the declaration must have a legal consequence, or consequences, beyond merely acknowledging that which already exists.

Prior to that decision, any declaration of trust was considered dutiable, provided it met the definition in subsection 8(3) of the Duties Act 1997 and none of the relevant concessions applied.

For the purpose of charging the duty the making of the statement is taken to be a declaration of trust over dutiable property and, accordingly, is a dutiable transaction.

When do these changes take effect?

The changes will take affect for acknowledgments occurring on or after 19 May 2022.

How is duty calculated?

Transfer duty is calculated as per Chapter 2 of the Duties Act 1997.

The duty is calculated on the dutiable value of the dutiable property as at the date of acknowledgment of trust.

Our online duty calculators can be used to quickly calculate duty liability.

Can this transaction attract premium transfer duty?

Premium transfer duty will be payable if the acknowledgment relates to residential property with a value greater than the premium duty threshold. Refer to the transfer duty page on our website for the current threshold.

Use our online duty calculators to quickly calculate duty liability.

Can this transaction attract surcharge purchaser duty?

Surcharge purchaser duty will be payable if the trustee of the trust is a foreign person and the dutiable property is residential-related property.

Refer to Chapter 2A of the Duties Act 1997 and Revenue Ruling G009 – Definition of a foreign person to determine the trustee’s foreign status and Surcharge Purchaser Duty liability.

What are the evidentiary and identification requirements?

There are new evidentiary requirements for Section 8AA. This information has been updated on our website and includes a link to the client identification requirements for this transaction type.

What forms do I need?

Minor changes to the forms required have been made in accordance with the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022. The updated forms must be used for this transaction type entered into on or after 19 May 2022.

Where a transaction is affected by a written instrument, a copy of the instrument must be provided when lodging your application for assessment.

How are these transactions processed?

This transaction type must be lodged via eDuties.

eDuties has a new application type.

Submit your documents and supporting information using application type "Acknowledgement of Trust – Section 8AA".

The Duties Document Matrix will be updated to include this transaction type.

Where can I find more information?