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NSW Stamp Duty - Should Each Asset be Divided Equally?

Discussion in 'Wills and Estate Planning Law Forum' started by CrossKB, 28 September 2016.

  1. CrossKB

    CrossKB Member

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    My mother’s deceased estate has been left in equal shares to three beneficiaries, A, B and C. The estate has a probated value of $3,000,000, comprising the family home ($1,500,000) plus cash ($900,000) and shares ($600,000).

    Beneficiary A, with the agreement of the other two beneficiaries, wishes to take possession of the family home, and to do so pay them $500,000 (being the excess of his one-third entitlement in the estate). It was expected that stamp duty on the house transfer would be based on the concessional rate ($50) for his one-third entitlement in the estate of $1,000,000, and at the regulated rate for the $500,000 excess.

    The NSW Office of State Revenue however has instead directed that only the first $500,000 can be at the concessional rate, with the balance $1,000,000 attracting the full regulated rate. An objection to that ruling has (so far) been dismissed.

    Is the NSW OSR correct in its interpretation that each asset in the estate must be divided equally among the beneficiaries (thereby increasing the stamp duty on transfer of the house to a single beneficiary), rather than the total value of the estate being distributed in whatever manner the beneficiaries agree (providing that each still receives their one third entitlement)?

    Many thanks.
     
  2. winston wolf

    winston wolf Well-Known Member

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    I can't give you a legal perspective but can see their logic. The purpose of the concessional rate is to avoid onerous taxes on beneficiaries such as spouses, etc.

    If the estate was distributed as the will stated 1/3 each then the 2/3 were sold to the beneficiary A it would have attracted stamp duty on $1000,000.

    So the concessional rate is not to avoid tax but to stop over taxing or double taxing.
     
  3. CrossKB

    CrossKB Member

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    Thanks Winston, yes, that is how the OSR seems to be interpreting the situation. But as the will divides the estate (that is, the total, rather than each specific asset in the estate - after all, physical items in an estate such as furniture, jewellery etc can't be physically divided other than by ascribing monetary values) equally between the three beneficiaries, then providing each of them with the equivalent dollar benefit would still be consistent with the terms of the Will. That is why we are struggling to understand why the OSR insists on the interpretation it has chosen.

    Advance efforts to obtain a clear opinion from OSR failed as all that the OSR would do is refer to the relevant sections of the Act (which are not clear) rather than answer the specific question (ie as per the example posted). So we are still in the dark ...
     

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