Company or Trusts
There are many different entities that people use to own assets. When investing in property, it is possible that you could use a company, a discretionary trust, a unit trust, a hybrid trust or a self-managed superannuation fund (SMSF). These trusts could have a corporate trustee or trustees that are natural persons. All of these different entities have different repercussions in relation to capital gains tax considerations, stamp duty, land tax, and succession issues in relation to your estate planning.
Stamp duty and tax consequences
The proliferation of companies, trusts and (SMSF`s) has meant that purchasing property has become extremely complicated and you really need to speak to your accountant and your lawyer before making any decision to buy a property. There can be severe tax and stamp duty implications of purchasing a property in the incorrect entity and attempting to change this after the Contract has been signed.
Correct description of Entity
It is also extremely important that the correct description of the entity be entered onto the Contract for this to be valid. For example, if you are buying property in the name of a trust with a corporate trustee, the correct description of the purchaser should be “ABC Pty Ltd as trustee for the John Smith Family Trust”. Similarly, when a husband and wife are trustees for their (SMSF), the correct description of the purchaser should be “John Smith and Mary Smith as trustees for the Smith Superannuation Fund”.
Sometimes the Contract for Sale is the only document which proves the entity that is actually purchasing the property. This is particularly so in NSW where the interests of trusts are not entered onto the title deed in the Titles Office. This issue could prove critical as to whether a (SMSF) owns a property or not in the eyes of the Australian Tax Office.
Should you require any further information in relation to this issue, please do not hesitate to contact our Property and Commercial Department Manager, Holly Gilhomle on 07 5506 8202 or Freecall 1800 621 071 or email firstname.lastname@example.org
Visit our Conveyancing web-page for more information and articles. We have a specialist Conveyancing team that has senior commercial lawyers, licenced conveyancers and highly trained and supervised paralegals to get the job done.
Downloadable PDF Brochures
- Business Structuring Advice and Asset Protection
- Body Corporate and Management Rights
- Buy/Sell Agreements
- Estate Planning and your Business
- SMSF to Purchase your Property
- Tips when Purchasing a Property