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Antony Joseph

Apr 15, 2022

Land tax

in SMSF Technical Forum

My clients own properties worth 2 million in their individual names in Victoria and are paying land tax. They want to constitute an SMSF and purchase a property worth 600k in Victoria.( Property threshold for land tax for a SMSF property is $ 755K ) Will this property under SMSF be added to the 2 million when calculating their land tax liability.

Thank you

1 answer0 replies

Comments (1)

THE AUDITORS INSTITUTE

Apr 19, 2022

Hi Antony

It is best if they confirm this with their lawyer / conveyancing agent given the rules are state based.

Per the Victorian State Revenue Office (SRO) a complying superannuation fund is an "excluded trust".

An extract from the SRO website below explains land tax treatment re excluded trusts.

Thanks

SMSF AAA

refer:

https://www.sro.vic.gov.au/land-tax-trust-faqs#How%20is%20a%20beneficiary%20of%20a%20trust

Excluded trusts

1. I am a trustee of an excluded trust. Do I have to lodge the notice of trust acquisition of an interest in land? What are some of my obligations if the trust ceases to be an excluded trust?

If the trust is an excluded trust, you are still required to notify us of a trust acquisition of an interest in land.

If the trust ceases to be an excluded trust, you must inform us of this change within one month of that happening. You will also need to notify us if the trust structure has now changed (e.g. if the trust is now a fixed, discretionary or unit trust). You should notify us in writing.

2. How is a beneficiary of a trust, who is a trustee of an excluded trust (e.g. the unitholder of a landholding unit trust is a trustee of a complying superannuation fund), taxed? Will the exclusion for complying superannuation funds apply to the beneficiary?

The trustee of the unit trust can avoid the surcharge rate by notifying us of the unitholders. If this happens, the benefit of the exclusion for the complying superannuation fund will flow through if the trustee of the superannuation fund notifies us.

The trustee of the unit trust will be assessed on the trust land at the general rates, and the trustee of the superannuation fund will be treated as the owner of the land. As the superannuation fund is an excluded trust, the trust surcharge rates do not apply.

Instead, the trustee of the superannuation fund will be assessed on the unit trust land together with any other land held on behalf of the superannuation fund at the general rates, subject to the deduction.

The trustee of the superannuation fund does not need to notify us of the beneficiaries.