By Stuart O’Neill, Special Counsel
A long awaited amendment to the Queensland Duties Act, extending the family primary production duty concession to inter-generational transfers for value, has commenced from 1 July 2016.
The Duties and Other Legislation Amendment Act 2016 (Qld) received assent on 27 June 2016. It removes the requirement for inter-familial transfers of family primary production businesses to be by way of gift.
Prior to July 1st, only interests in primary production businesses that were gifted between generations were exempt from duty, with transfer duty applying on any consideration paid. This restricted the way these assets could be passed to the next generation duty free.
Requiring assets to be gifted can create difficulties within family groups where only some but not all children want to take over the farming business. A gift to those children may be inequitable if it cannot be balanced by gifts of other property to the other children out of the parent’s estate.
The change now permits parents to ask children to contribute to the cost of acquiring the farming assets without the transaction incurring stamp duty. This means parents can achieve better equity between children who take over the farm and those who do not.
Where value is contributed for the farming assets at the time a child acquires them, there will be no (or a lesser) depletion of the parent’s estate available for distribution under their Will.
Also, there will be no (or lesser) difficulty trying to account for a gift of farming property in a parent’s Will using assets remaining when the parent dies. This can be especially challenging if the value of gifted assets changes between the date of the gift and the date of death.
The change is a welcome reform for all farming families with estates that comprise mainly farming assets. It creates new inter-generational planning opportunities both for farming parents and their children.
Farming families that have previously developed succession plans and prepared Wills based on the gifting of farming property are strongly encouraged to reconsider those plans and to obtain fresh legal and accounting advice whether the new provisions can be utilized to achieve better outcomes for them.