Prove it! (Evidence required for concessional stamp duty application)

The NSW Duties Office has made available a list of their evidentiary requirements to clarify what is needed to apply for concessional stamp duty when a member transfers NSW business real property into their SMSF.

Under the concession provided by s62A of the NSW Duties Act, if an individual transfers or sells NSW real estate into their super fund, being property of which they are the owner (and not held by them in trust), duty on the transfer will be only $500 rather than the normal ad valorem duty.

The concession only applies if the real estate is owned by an individual and the real estate is transferred to or purchased by the trustee of the transferor’s SMSF and is held by the trustee (or a custodian) solely to provide retirement benefits for the transferor.

Further the real estate must be business real property and acquired or transferred at market value (otherwise the trustee would not be permitted to acquire the real estate).

The NSW Duties Office has recently released a list outlining their evidentiary requirements to help with the lodgement of documents for assessment under s62A. But is this actually helpful?

The new requirements are as follows:

1. Original executed Instrument of transfer or agreement to transfer
   
2. Copy of the self-managed superannuation trust deed
   
3. Certificate of compliance or a search from ATO's Superfund look-up confirming the superannuation fund as a complying fund
   
4. If a superannuation fund has not been confirmed as a complying superannuation, a statutory declaration that the trustee is satisfied, as at the execution date of the transfer, that the fund will be confirmed as a complying superannuation fund
   
5. Current register of members of the superannuation fund
   
6. Evidence that the property meets the SIS Act business real property test
   
7. If business real property is being transferred, confirm that the property is used for business/commercial purpose and what percentage of the property is used to carry on a business
   
8. Evidence that the business real property is being acquired for market value from a related party (being a member or members)
   
9. Evidence that the in-house asset is being acquired from members at market value
   
10. Stamped copy of the custodian trust deed if transferee is a custodian
    
11. Where there are more members in the superfund than the transferors under the transfer, a clause in either the super fund deed or a variation to the super fund deed that the property is segregated for the benefit of the transferors/members. This clause should be irrevocable and not subject to change.

When carefully considered, the above list seems to trigger more questions than it helps answer. SMSFs do not use a register of members, so what should be provided instead? How does an SMSF satisfactorily show that the property is business real property? Is the Duties Office after a copy of the current trust deed only or the establishment deed with all the subsequently amending deeds?

To try and confuse the issue further, the Duties Office have confirmed during telephone discussions that the above are not hard and fast requirements; instead they are provided for guidance only and an assessor may still request further evidence or may accept less stringent evidence.

And that is where we come in handy. We have assisted clients with numerous transactions of this type over the years which means we understand how the assessment process works, what the Duties Office want and how to meet their expectations in the simplest and most concise way.

Our implementation service is also convenient as it includes us “negotiating” with the Duties Office if they go over the top with their requests. We may be able to change their minds so that no additional hassle is imposed on the client.