Transfers between first cousins now eligible for family farm transfer duty exemption

WHO SHOULD READ THIS

• Professionals advising and primary producers considering undertaking personal and business succession planning.

THINGS YOU NEED TO KNOW

• The Queensland Government has broadened the scope of the existing primary production exemption for duty purposes by introducing an administrative arrangement expanding the definition of ‘defined relative’ to include first cousins and their spouses.

WHAT YOU NEED TO DO

• If you are considering implementing or reviewing a business succession plan, please contact us to discuss your options.

The Queensland Government continues to encourage primary producers to undertake succession planning and business restructuring by announcing a 12 month administrative arrangement to allow transfers of family farms and other primary production business assets between first cousins to fall under the definition of ‘defined relatives’ under the Duties Act 2001 (Qld). Therefore, such transfers will not attract transfer duty.

By way of re-cap, you are eligible for the family business concession if:

• the transfer is to a ‘defined relative’
• the transfer is of ‘business property’
• the ‘business property’ is used in carrying on a business of primary production, and
• the transferee intends to carry on the business.

Prior to the announcement on 23 May 2017, a ‘defined relative’ included a spouse, parent, grandparent, brother, sister, nephew or niece, an aunt or uncle and the spouse of any of those persons.

The administrative arrangement now broadens that definition to include an individual’s ‘first cousin’ (and their spouses), with a ‘first cousin’ being defined as a person who is a child of an aunt or uncle of the person who is related by blood, or considered to be related by blood at law by virtue of adoption.

If eligible, and when applied, the dutiable value of the property to which the transaction relates is taken to be nil.

For many of our clients, a significant driver behind decisions to restructure or plan for the future is the inter-generational transfer of wealth, here represented by a farming business. Since the changes were first announced, we have assisted a number of primary producers to access the concession as part of their broader business restructuring and succession planning.

In practice, broadening the definition of a ‘defined relative’ to include first cousins has significantly widened the scope for primary producers to access the duty exemption and to transfer assets during their lifetime, without the added burden of significant duty costs. The arrangement is only available until May 2018.

Farm management grants are also available to farming families to apply for a rebate on professional advice obtained in relation to succession planning and business restructuring, including the ability to meet the family farm exemption and other small business capital gains tax concessions.

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.