by By Lawyers
The By Lawyers discretionary trust deeds and associated precedents have been updated to clarify the definition of foreign person.
The definition operates in the clauses that prohibit a foreign person from being a beneficiary, to avoid the imposition of surcharge duty and land tax.
See the discretionary trust deeds in the By Lawyers Trusts guide.
by By Lawyers
The By Lawyers Trusts guide has been extensively reviewed, resulting in:
Practitioners are also reminded that a new precedent Trust Deed Review Checklist was added to the Trusts guide recently in response to a request from a practitioner.
The checklist is a useful tool for lawyers when:
The new Trust Deed Review Checklist is found in folder B. Trusts generally in the By Lawyers Trusts guide.
Trusts is an extensive publication. The commentary deals with all aspects of discretionary trusts, unit trusts, charitable trusts, and special disability trusts. The array of precedents includes deeds and clauses for various iterations of all of those trusts.
At By Lawyers, we love receiving feedback from the law firms using our content, and we are always ready to add helpful new precedents that practitioners need. It’s part of our commitment to practicality and helping lawyers enjoy practice more.
If using our Trusts guide, please don’t hesitate to let us know what you think of the enhancements and additions; you can email us any time at askus@bylawyers.com.au.
by By Lawyers
For the assistance of practitioners acting in trusts matters, a new precedent Trust Deed Review Checklist has been added to the matter plan in the By Lawyers Trusts publication. The new precedent was developed in response to a request from a practitioner.
The checklist is a useful tool for lawyers when:
The new Trust Deed Review Checklist is found in folder B. Trusts generally in the By Lawyers Trusts guide.
At By Lawyers we love feedback from the firms using our content and are always ready to add new precedents that practitioners need. It’s part of our commitment to practicality and helping lawyers enjoy practice more.
by By Lawyers
Recent duty and other revenue amendments impacting conveyancing, trusts, and family law have been incorporated as applicable into the relevant By Lawyers publications.
The State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 (NSW) amended various revenue Acts with effect from 19 May 2022, including:
These revenue amendments touch on various areas of practice.
Ad valorem stamp duty is payable on option fees under put and call option deeds. New section 8 (1)(b)(ix) of the Duties Act 1997 provides that duty is payable by the grantee within three months of an option being granted. This changes the previous position where duty was only payable on an option fee if the option was exercised.
Duty is assessed on the option fee, not including security deposits, performance payments, and legal costs.
The grantee is not entitled to claim a refund for any stamp duty paid, regardless of whether the call option is exercised. Also duty paid on the option fee is not credited toward the duty payable on the property when the option is exercised and the contract completed.
The changes do not apply to option agreements entered into before 19 May 2022.
A new section 49A (1D) of the Duties Act 1997 provides that to qualify for a 12-month deferral of stamp duty on off-the-plan purchases, a residence requirement must be met. At least one of the purchasers must use and occupy the property as their principal place of residence for at least 6 months, within 12 months of completion. Australian Defence Force personnel are exempted from the residency requirement. A new version of the Revenue NSW purchaser declaration form is available. Part 6 of the form relates to off-the-plan purchases and provides for the nomination of ADF personnel.
A new s 104ZJA(1) (c) of the Duties Act 1997 provides that an Australian-based developer which pays surcharge purchaser duty on a transfer of residential land may have it refunded they later change the use of the land to wholly or predominantly commercial or industrial.
The application for a refund must be lodged online using the application type Australian Based Developer Application for Exemption & Reassessment.
Section 13A (3) of the First Home Owner Grant (New Homes) Act 2000 has been amended to include a new definition of the eligibility cap, including how to calculate the total value of the transaction based on the type of transaction and when it occurs.
New sections 5B(2A) and 5B(2B) of the Land Tax Act 1956 provide for a discretionary exemption allowing those who do not occupy their principal place of residence for 200 days continuously in a year to remain exempt from land tax. This allows owners to, for example, live and work overseas for a period without losing the exemption.
The By Lawyers Sale of real property (NSW), Purchase of real property (NSW) and 1001 Conveyancing Answers (NSW) publications have been updated accordingly.
The amending Act broadens the scope of dutiable transactions under s 8(1)(b)(ix) of the Duties Act 1997 by introducing duty on transactions that result in a change in beneficial ownership and acknowledgement of trust.
Under s 8(3), the definition of change in beneficial ownership has been extended to include the creation and extinguishment of dutiable property, a change in equitable interests in dutiable property, and dutiable property becoming and ceasing to be subject to a trust.
This amendment directly arises from the case of Benidorm Pty Ltd v Chief Commissioner of Revenue [2020] NSWSC 471 where the Supreme Court held that the definition of declaration of trust in s 8(3) of the Duties Act 1997 as it then was must have a legal consequence, or consequences, beyond merely acknowledging that which already exists. The taxpayer in that case held real property and shares on trust for a beneficiary. When the beneficiary died his sole beneficiary and executor made a declaration of trust substantially the same as the original trust. On appeal the taxpayer was successful and was able to avoid paying duty on the second declaration, which acknowledged and evidenced a trust that was already in place. Such an acknowledgment of trust will now be caught by the Act.
The By Lawyers Trusts publication has been updated accordingly.
A new s 68 (1A)(b)(iia) of the Duties Act 1997 means that for de facto relationships transfers of property effected by an agreement made to divide relationship property due to the breakdown of a relationship will be exempt from duty. Previously, to be exempt from duty the transfer had to be effected by a binding financial agreement, court order, or purchase at a public auction. This brings the exemption for de facto couples into line with that for married couples. These exemptions are discretionary and depend on sufficient evidence being supplied in support of the application.
A new version of the form Revenue NSW ODA 069 – Application for Exemption or Refund – Break up of marriage or De facto Relationship is available and needs to be completed.
The By Lawyers 101 Family Law Answers publication has been updated accordingly.
by By Lawyers
Helpful new precedents have been added to all By Lawyers Wills publications for an individual, or a couple, to establish a single testamentary discretionary trust.
These precedents augment our existing precedents which create multiple testamentary discretionary trusts and make for faster and easier drafting where only one testamentary discretionary trust is required.
The new precedent, which is found in the Wills creating testamentary discretionary trust folder, was suggested by a subscriber. We love receiving feedback from firms who use our precedents and we are pleased to provide additional precedents where required.
by By Lawyers
Property lawyers often have to deal with properties owned by trustees, either corporate or individuals, and this adds another layer of complication to what is regarded by the public as the ‘simple’ process of conveyancing. Often the client is not even aware that the property is owned by a trustee, or at best has a minimal understanding of the consequences of such ownership. The process is complicated even further when the transactions involves a financier, which is often the case.
The concept of a trust has been around for centuries, but its impact on day to day transactions greatly increased in the 1970s and 80s when accountants decided that the trust concept provided substantial advantages for the average taxpayer, partly as an asset protection mechanism but principally as a tax-saving device by distribution of income within the family. Hence the prevalence of the ubiquitous Family Trust that seemed to push its way between the Average Joe (or Josephine) and their assets. In fact, the asset protection motivation was quickly dissipated by financiers requiring personal guarantees in respect of trust borrowings and the tax benefits were whittled away by the imposition of maximum tax rates on income directed to infants. But like a runaway horse, once mounted, it is difficult to get off a Family Trust.
The Family Discretionary Trust typically consists of a trust deed with extensive Trustee powers recited in standard form and then a Schedule setting out the particulars relevant to the particular trust. Such documents were often purchased ‘off the shelf’, much the same as company incorporation documents, and as they were a mechanism designed principally for tax minimisation, little regard was had to the niceties of trust law. Four copies of the Trust Deed would usually be executed, with the accountant, lawyer and client having a copy each and the fourth copy generally staying with either the lawyer or the accountant. It would be fair to say that the execution process might not always be carefully undertaken and some of the four copies might remain unsigned. From time to time financiers might seek copies of the Deed and a prudent lawyer, accountant or client would hopefully ensure that the original Deeds were held in safekeeping but, as is fitting for a document that was designed to record a fantasy, that was often not the case.
Forty or fifty years after these structures were put in place, problems are arising when the original documents cannot be found. The purpose of the documents were to record the Trustee as the legal owner of assets, both real estate and personal property such as bank accounts and shares, and when it comes time to deal with these assets the Trust Deed establishing the Trustees right to deal may need to be produced. This situation was considered by the Supreme Court in Application by South Melbourne Continental P/L 2018 [VSC] 398.
This was a typical situation of a small business established by a patriarch thirty-five years previously that had been conducted successfully over those years, held substantial assets and was now ‘operated’ by a son on behalf of the family. But the Trust Deed could not be found and this presented problems in dealing with the assets and the business generally. The Supreme Court has a number of powers relating to trust property, including Order 54 Supreme Court (General Civil Procedure) Rules 2015 and an ability to make orders under the Trustee Act 1958. However, the Application was unsuccessful as the McMillan J. was not satisfied that all possible attempts to locate the Trust Deeds had been carried out and it may be concluded from the judgment that the powers vested in the Court will not be made available without extensive evidence relating to the original terms of the Trust Deed and the attempts to locate the documents.
This outcome may be contrasted with the successful Application in D.R.McKendry Nominees P/L 2015 [VSC] 560 where an argument based on the presumption of regularity, that does not appear to have been argued in South Melbourne Continental, was successful. A similar argument found favour with McMillan J. in a case concerning a lost Superannuation Deed in Re Thomson 2015 [VSC] 370.
by By Lawyers
By Lawyers have a comprehensive new Trusts Guide.
The new guide contains commentary and precedents for establishing a new trust, amending an existing trust, or bringing a trust to an end through vesting or termination.
This new publication is a substantial enhancement of the previous trusts section in our Companies, Trusts, Partnerships and Superannuation guide.
The new detailed Trusts Guide deals with the various types of trust structures, including:
The commentary discusses important issues affecting the use of trusts including:
The new guide also contains many essential and useful precedents such as:
The new Trusts Guide is available to LEAP companion product subscribers through the Guides and Precedents button in a LEAP matter, or to By Lawyers website subscribers as part of the Companies, trusts, partnerships and superannuation guide.
by By Lawyers
Following a subscriber request, we have added a new precedent to our Unit Trusts Guide, being a Deed of termination of trust.
There are many reasons a client may wish to terminate or dissolve a trust prior to the vesting date. There are also several methods of bringing a trust to an early end including:
When brining a trust to an end there are many important issues for the trustee to consider including:
The need for a deed confirming the termination of the trust was suggested by one of our subscribers. Having considered the issue, By Lawyers have created a simple new precedent Deed poll, terminating the trust. This will allow practitioners to ensure that when their trustee clients terminate a trust it is evidenced and supported by proper documentation.
At By Lawyers we are always grateful for any feedback on our precedents and will happily accommodate subscriber requests for new documents where appropriate.
by By Lawyers
By Lawyers has expanded our comprehensive Companies, Trusts and Partnerships guide to include commentary and precedents covering special disability trusts.
A special disability trust can be established to provide for the care and accommodation of a disabled family member and if compliant will allow the disabled beneficiary of the trust to retain their full entitlement to a Centrelink pension. There are also generous concessions for contributions to a compliant special disability trust.
The commentary covers everything a practitioner needs to know about establishing a special disability trust for their clients, including:
The By Lawyers Special Disability Trust Deed is provided and includes all of the mandatory clauses from the model trust deed for special disability trusts published by the Department of Social Services, as required to comply with the Social Security Act 1991 and the Social Security (Special Disability Trust) Guidelines 2011.
by By Lawyers
New precedents have been added to the publication Companies, Trusts, Partnerships and Superanuation
Put and call option agreement
Put and call option precedent for use by a private company allowing the vendor to grant the purchaser a call option over the shares and the purchaser to grant the vendor a put option over the same shares.
Company constitution
Adding to a comprehensive set of commercial incorporation tools for practitioners and their clients, the constitution is for company members who elect to use a constitution, instead of the replaceable rules to guide their internal governance.
The company constitution precedent includes the general rules governing the relationship between a company’s directors, secretary and shareholders and the activities of the company and can be easily customised to suit individual clients’ requirements.
Table of Replaceable Rules
For company members who elect to use the rules to guide their internal governance. The main advantage of the replaceable rules is that a company who uses them can ensure that they are always up to date with developments and changes in regulation.