loader image

Home > Blog > Intergenerational Transfer Exemption – Requirement to have default capital beneficiaries for discretionary trusts

Intergenerational Transfer Exemption – Requirement to have default capital beneficiaries for discretionary trusts

Date: 8 January 2019

When considering transfers of primary production land, it is important to structure your affairs appropriately from the outset. Specifically, where discretionary trusts own the land or carry on a business on the land, planning is essential to minimise taxation and stamp duty implications.

Section 274 of the Duties Act 1997 (NSW) provides a stamp duty exemption for intergenerational transfers of primary production land. To be eligible for the exemption the Chief Commissioner must be satisfied that:

  • the transferor (or the person directing the transferor) is a member of the family of the transferee; and
  • the relevant land is used by a business carried on by a member of the transferee’s family (or an entity ‘controlled by’ such a family member).

Hence, when a discretionary trust is either the transferor or the entity that carries on the business on the land it is necessary to determine who directs the trust. Section 274(3)(d) recognises the ‘person directing the transferor’ to be persons who are entitled (as takers in default) to not less than a 25% interest in the capital of the trust, being an entitlement that existed for at least 3 years before the transfer, or from the date of establishment of the trust.

Where the discretionary trust has no takers in default in respect of the capital of the trust, Revenue NSW takes the view that there is no one that would qualify as a ‘person directing the transferor’.

Therefore, when a discretionary trust has no default capital beneficiaries, the intergenerational stamp duty exemption will not be available. Hence, when a discretionary trust either holds or carries on a business on primary production land, it is very important that default capital beneficiaries are included in the trust’s deed.

If you have any concerns about the terms of your current trust deed and the effect this may have on your estate plan, please do not hesitate to contact us.

Know More

EOI – Payday Super Workshops

EOI – Payday Super Workshops

Our Payday Super workshops have been well received across our Glen Innes and Tamworth offices, and the responses have been extremely positive. Sessions have been well attended, with clients leaving feeling more informed, confident, and prepared for the changes ahead....

read more
Armidale Keynote Event – Leading on the Edge

Armidale Keynote Event – Leading on the Edge

Last week, we were proud to host the Leading on the Edge Keynote Event in Armidale as part of R+M’s 75‑year celebrations. Held at the Armidale Ex‑Services Memorial Club, the event brought together clients and business leaders from across the New England North West....

read more
Payday Super Reforms

Payday Super Reforms

Payday super reforms (Australia) commence 1 July 2026. Employers will need to pay Super Guarantee (SG) contributions at the same time as wages, rather than quarterly. What’s changing • Super must be paid on payday: employers must pay SG at the same time as wages...

read more