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In this week’s edition of ‘It depends’, senior
associate Tom Walrut talks about the new stamp duty relief for
small business restructures.
Hi and welcome to this week’s edition of It Depends where
we’ll be discussing the newly legislated stamp duty relief for
small business entities restructuring into a company.
What is the new duty exemption?
The new duty exemption allows for a restructure of eligible
entities from a partnership, discretionary trust or sole trader
into a company. It was previously administered under a ruling put
out by the QRO, but has now been put into legislation.
Is my business eligible?
Well, as always, it depends. The basic eligibility criteria to
apply this exemption are that you have less than $5 million in
annual turnover. You have less than $10 million in dutiable value
for the property that you’re transferring. And finally, that
the transferee company is as close to dormant as you can possibly
What are some tricks and traps with the new duty
As always, with all of these new duty exemptions, any exemption
really, the devil is always in the detail. The first point is that
the transferee company needs to be as close to dormant as possible.
The biggest point there is that the transferee company can’t
have been the beneficiary of any trusts within the group. So, you
need to review your entire group structure and take some steps to
ensure that the transferee company isn’t a beneficiary of any
trust within the group. The next one is that in terms of the
turnover, the $5 million turnover test, you can actually average
over three years. So, it means if you’ve had two good years and
one bad year and that bad year pulled you under $5 million for your
annual turnover, you can average it out and still apply the
exemption. The third point is that for the $10 million test,
it’s only the dutiable value of the assets that you actually
transferring, which is going to be subject to the $10 million test,
which means that you can cherry pick certain assets if that’s
what you’re after. And finally, that there are no clawbacks for
the application of the duty exemption, which means that if you
restructure as a pre-sale step and use a duty exemption and then
sell the shares in the company where there would be no duty, the
QRO can’t come back and claw all of that stamp duty back.
As always, we’ve got a very friendly team here. So, if
you’ve got any questions about the application of this
exemption or any other duty questions, do feel free to give us a
call at any time. Thanks.
Cooper Grace Ward is a leading Australian law firm based in
This publication is for information only and is not legal
advice. You should obtain advice that is specific to your
circumstances and not rely on this publication as legal advice. If
there are any issues you would like us to advise you on arising
from this publication, please contact Cooper Grace Ward
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