In Specie Contributions – Recent NSW Amendments to Duties Act

The NSW Duties Act, 1997 has recently been amended to clarify the operation of the “section 62A” concession.  This concession provides that nominal stamp duty (of $50 or $500 depending on the nature of the transaction) applies where real estate owned by a member is transferred to a self managed superannuation fund to provide retirement benefits for that member.  For the concession to apply, various conditions must be satisfied. In particular, the self managed superannuation fund must be a complying superannuation fund.  

The complying superannuation fund condition was difficult to apply to newly established superannuation funds.  These funds, while they are regulated superannuation funds, are not complying superannuation funds until the Commissioner of Taxation issues a notice of compliance in respect of the fund.  The Commissioner will only issue the notice of compliance once the first annual return for the fund has been submitted and processed. Once issued, the notice retrospectively applies from the date of establishment of the fund.

The recent amendment addresses this issue by treating the newly established superannuation fund as having met the complying superannuation fund condition if the trustee of the superannuation fund is satisfied, at the time the duty liability arises, that the fund will be confirmed as a complying superannuation fund.

Essentially, this means that the section 62A concessional duty will apply to in specie asset transfers to recently established funds so long as the superannuation fund is a regulated superannuation fund at the time of the transfer and the trustee is not aware of any reason why the Commissioner of Taxation would not, in due course, issue a notice of compliance in respect of the fund.

The amendment also provides that the Office of State Revenue may reassess and thereby impose normal duty if it is satisfied that the conditions for the entitlement to concessional duty were not satisfied.

Another change to section 62A is to impose a requirement that the transferred property “is to be held” solely for the benefit of the transferor member rather than “is held for the benefit of the transferor”.  This slight change of wording suggests that the arrangements the self managed superannuation fund must have to ensure that the transferred property is held solely for the transferor must be in place before the transfer takes effect.

These changes were made by State Revenue Legislation Amendment Act 2012 which received Royal Assent on 11 April 2012.