NSW Stamp Duty Concession for SMSFs

Posted 11 Dec '20

NSW Stamp Duty Concession for SMSFs

By Vicky Richards

Since 1 July 2010 concessional stamp duty rates have been available to SMSF’s on the transfer of NSW business real property from a member to the SMSF. A duty of $50 applies to eligible transfers where there is no borrowing and $500 where there is borrowing.

There are some strict conditions that must be met before the concession applies.  To receive the concession the transfer must be from an individual (or individuals) to the SMSF (the property owner cannot be a trust or company).  The property transferred must be held by the Trustee of the SMSF for the sole benefit of those individuals who transferred the property. 

The SMSF does not have to use cash to pay for the property.  The property can be paid for from any combination of cash, borrowing by the SMSF and in specie contributions from the owner of the property (subject to the contributions caps).  

There may be many advantages of transferring business real property to an SMSF.  Advantages such as asset protection, tax benefits flowing from the rental income received by the fund and the rental deduction for the business, cash flow, releasing equity invested in the business real property, and in circumstances where the small business capital gains tax (CGT) concessions may not be available to the business in the future.

Trustees interested in a strategy to transfer business real property to their SMSF should seek advice surrounding the many complex issues and consider CGT and GST implications that may arise from the transfer of the property.