One of the key items highlighted in our recent article on Queensland Budget 2016 was the announcement of the Rural Assistance Package which extends the duty concession on transfers of family farms to transactions other than by way of gift. To assist business owners drill down into how these changes can be utilised we’re delighted to share with you additional information provided to us by McCullough Robertson Lawyers.
The Rural Assistance Package is a total of $36 million over five years from the 2016 financial year, designed to assist rural producers across Queensland affected by debt and drought.
Under the exemption as it currently stands, no duty is payable on the transfer of business property (farm land and associated goods) between members of a family to the extent that the transfer is by way of a gift. In practice, this has significantly limited the availability of this exemption.
However, from 1 July 2016 the amendment proposed under the Duties and Other Legislation Amendment Bill 2016 (Qld) will remove the requirement that the transfer be by way of gift. Under the package, the exemption will now be available for any transfer of ‘business property’ where:
- the transferor, or person directing the transfer, is a defined relative of the transferee;
- the transferee takes the transfer in their personal capacity (i.e. not as trustee);
- the business for which the business property is used is carried on by the defined relative (whether alone or with others); and
- the business is intended to be carried on by the transferee (whether alone or with others).
‘Business property’ is defined to include land primarily used to carry on a business of primary production and personal property used to carry on the business on the land. ‘Personal property’ covers goods such as plant and equipment and livestock, but does not extend to other business assets such as business names, water entitlements, brands or debtors.
The exemption is also available:
- in circumstances where the business property to be transferred is owned by a company or trust, so long as the person directing the transfer is a defined relative (effectively the extended family) of the transferee;
- for certain transfers of interests in family farming partnerships and unit trusts; and
- for certain acquisitions of shares in companies that hold family farms.
Those looking to take advantage of these new rules should seek specialist duty advice if considering transferring primary production property amongst family members in order to review eligibility for the concession to ensure the best possible duty outcome.
Hanrick Curran has been supporting primary producers for over 30 years and welcomes the opportunity to discuss how these changes can be utilised to support the financial operations of agribusinesses. Please contact your usual Hanrick Curran adviser or speak with one of our specialist Agribusiness advisers, John Kotzur, Kim Hanrick or Scott Hutton on 07 3218 3900.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.