Significant changes to the Duties Act 2008 to ease the family farm duty exemption
The recent changes to the Duties Act 2008, introduced as part of the Revenue Laws Amendment Bill 2018 and taking effect from 1 July 2019, will cause significant changes to the application of stamp duty in Western Australia. Importantly for our farming clients, the proposal will implement a relaxation of the rules regarding the Family Farm Transfer Duty Exemption (the Farming Exemption). The Farming Exemption is an important tool utilised by farming families to allow for the transfer of farming property to family members, without having to incur the payment of stamp duty, which can be a significant cost. The updated legislation is designed to more adequately reflect modern farming business structures and address many of the restrictions which have previously caused significant difficulties for clients wishing to utilise the Farming Exemption as part of farming succession arrangements. As part of the changes, the Farming Exemption will now apply where:
- a farmer transfers farming property to a related discretionary trust under which a farmer is a beneficiary;
- a farmer transfers farming property to a family member and retains an interest in the entity conducting the farming business on the land;
- a farmer who previously conducted a farming business is not doing so immediately prior to a transfer of land to a family member, but a family member (or a related entity) is;
- the partnership that conducts a farming business includes non-family members;
- a farmer and their spouse (transferors) and the farmer’s sibling and their spouse (transferees) are parties to a transaction or have an interest in the entity conducting the farming business; and
- if a transferee is a bare trustee, the beneficiaries hold an interest in the related entity that conducts the farming business.
Although the new legislation is designed to relax the strict requirements surrounding the Farming Exemption, care is still required to ensure that the transaction remains compliant with the Duties Act 2008 and the transfer will be exempt from stamp duty. Should you require our assistance, please call us or or email us.
Date: July 2019