The State Revenue Office has issued new guidelines in respect of the intergenerational rural transfer, which has potential duty consequences when transferring the family farm between family members.

Under section 225 of the Duties Act 2001 (Act), certain transfers of primary production land are exempt from duty, including a transfer to a trustee of a discretionary trust of which all beneficiaries are individually named and are relatives of the transferor (or relatives of all shareholders if the transferor is a company or relatives of the named beneficiaries if the transferor is a trust).

It is also a requirement under section 225 of the Act that the trust “may not be varied other than by the addition of a relative individually named in a deed of variation”.

Under the new guidelines, a discretionary trust will not qualify for the exemption if the trustee has the discretion to remove beneficiaries.

This is a significant change in interpretation by the State Revenue Office and will require careful consideration when preparing trust deeds for intergenerational rural transfer purposes.

If you require any assistance, please contact Henry Jones or Craig Bowman in the Commercial Team.