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Assessing transfer duty for declarations of trust by custodians
Understand the assessment criteria for SMSF custodial arrangements. Learn about the concessional duty, lodgement procedures, and complex assessments.
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Declaration of trust by custodian - assessment criteria
Section 62B provides a fixed rate of duty of $500 on a declaration of trust. The trust must be over dutiable property purchased or to be purchased by a custodian (bare trustee) on behalf of a trustee of a self-managed superannuation fund.
Duty of $750 will be charged on a declaration of trust by custodian entered into on or after 23 October 2024.
For the fixed duty rate to apply, all of the following criteria must be met.
If the superannuation fund was not in existence at the time the custodian entered into the contract to purchase the property, the self-managed superannuation fund cannot be the actual/real purchaser.
If the superannuation fund was established after the date of the contract, the declaration of trust will be liable to transfer duty calculated on the dutiable value of the property. Refer to section 8 and section 11 of the Duties Act 1997. In these cases, all documents must be submitted to Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing instructions.
The fixed duty rate under section 62B of the Duties Act 1997, only applies to a declaration of trust over property being purchased by a self-managed superannuation fund and the following must apply:
the declaration of trust must name the superannuation fund, and
the purchaser in the contract for sale must be the custodian/bare trustee, and
the custodian/bare trustee must be the same as identified in the declaration of trust, and
the declaration must identify the property being purchased.
If the above does not apply, all documents must be submitted to Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing instructions.
Evidence must confirm the actual/real purchaser (trustee of the self-managed superannuation fund):
paid the deposit, and
has paid, or has the capacity to pay, the balance of the consideration for the acquisition of the dutiable property or has borrowed money to pay the balance of the consideration.
Acceptable evidence must display the full account holder’s name, being the trustee of the self-managed superannuation fund. The evidence can be a combination of the following:
deposit slips
bank statements
receipts
copies of the loan approvals or loan agreement etc.
If the above cannot be satisfied, for example, when finance has yet to be approved, or part of the funds have been provided via member contributions, all documents must be submitted to Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing instructions.
Minor amendments may include but are not limited to, the correction of typographical errors and minor changes to wording that does not affect the duties assessment outcome.
Amendments that change the parties to the transaction, or the dutiable property being purchased in the original declaration of trust must not be processed on EDR and are to be submitted to Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing Instructions.
A declaration of trust by custodian entered into prior to this date may still be eligible for a concession under section 55 or section 62A(3A)* of the Duties Act 1997, if all other criteria is met. These must be submitted to Revenue NSW for assessment via eDuties. Refer to Chapter 4 - Processing instructions.
*Repealed 23 October 2014
Cautions
The information below is provided to prevent common assessment and processing errors identified by Revenue NSW under this document type.
In some instances, where there is a custodian arrangement in place, the contract for sale of land may also include a declaration of trust. For example, where the purchaser is described below, there are three dutiable transactions.
Purchaser: Custodian A on behalf of SMSF Trustee A on behalf of the SMSF Superannuation fund.
1. Declaration of trust by custodian
If all the assessment criteria is met and the concession under section 62B of the Duties Act 1997 applies, the declaration will be liable to the fixed rate of $500 duty.
Duty of $750 will be charged on a declaration of trust by custodian entered into on or after 1 February 2024.
2. Declaration of trust in the contract for sale of land
If the declaration of trust by custodian meets the criteria for the concession under section 62B of the Duties Act 1997, the concessional duty of $50.00 under section 18(6A) of the Act may apply to the declaration of trust in the contract for sale of land.
Duty of $100 under section 18(6A) of the Act may apply for transactions entered into on or after 1 February 2024.
3. Contract for sale of land
Liable to transfer duty calculated on the dutiable value of the dutiable property.
Important: If the assessment criteria are not met, both the contract for sale and the declaration of trust in the contract for sale may be liable to transfer duty calculated on the dutiable value of the property.
Occasionally, although there is a custodian deed/declaration of trust document in place, the self-managed superannuation fund trustee is the purchaser on the contract, not the custodian.
If this has occurred, and the transferee is the custodian, the documents will need to be submitted to Revenue NSW for assessment via eDuties or contact us to discuss your specific transaction.
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