Declaration of trust in an agreement for sale v2

Example 1: PSQ Pty Ltd purchases a property as trustee for ANT Pty Ltd. The purchaser under the contract is described as PSQ Pty Ltd as trustee for ANT Pty Ltd. There is no prior declaration of trust between PSQ Pty Ltd and ANT Pty Ltd. The contract is liable to duty on the purchase of the property as well as a declaration of trust. This is because the contract also declares that PSQ Pty Ltd is purchasing the property of behalf of ANT Pty Ltd.

Example 2: PSQ Pty Ltd purchases a property on behalf of ANT Pty Ltd. The purchaser under the contract is PSQ Pty Ltd and there is no evidence of a declaration of trust. After the purchase of the property, PSQ Pty Ltd & ANT Pty Ltd issue a statement acknowledging that PSQ Pty Ltd as trustee acquired the property for ANT Pty Ltd as beneficiary. The statement is liable as an acknowledgement of trust. The person liable is the person declaring/acknowledging the trust i.e., PSQ Pty Ltd.

Example 3: If after the contract is executed but before the transfer is completed PSQ Pty Ltd declares or acknowledges that the property is being purchased on behalf of ANT Pty Ltd, this will also be liable to duty as a declaration or acknowledgment of trust.

Note: If the beneficiary (real purchaser) provided the purchase money, section 55 may apply, and concessional duty of $50 will be payable on the declaration or acknowledgement of trust instead of ad valorem duty. For section 55 to apply, documentary evidence is required to prove that the real purchaser provided the deposit and the purchase money.

Note: If there is a declaration or acknowledgement of trust that declares or acknowledges the same trust to which the same dutiable property was transferred to the person declaring the trust and ad valorem duty was paid, it may be liable to concessional duty of $10 under section18(6) of the Act.

  1. as trustee for a named person or persons
  2. as trustee for a named class of persons (for example, ‘ the children of X’, or ‘the beneficiaries of the XYZ Trust’)
  3. as trustee for a named corporate body
  4. as trustee for a named unincorporated body.
  1. as custodian for the trustee for a named person or persons
  2. as custodian for the trustee for a named class of persons
  3. as custodian for XYZ as trustee for a named corporate body
  4. as XYZ as custodian for ABC Pty Ltd as trustee for a named unincorporated body.
  1. as trustee
  2. as trustee for the estate of a named person
  3. as trustee for a named trust
  4. as trustee for a named superannuation fund
  5. as trustee for a company to be formed or incorporated
  6. as custodian for the trustee for the estate of a named person
  7. as custodian for the trustee for a named trust
  8. as custodian for the trustee for a named superannuation fund
  9. as custodian for the trustee for a company to be formed or incorporated.

Note: In paragraph 14 the reason the instrument is not liable as a declaration or acknowledgement of trust is because the words in the instrument are merely descriptive of the person’s capacity as trustee/custodian and the beneficiaries of the trust are not mentioned (i.e., the beneficiaries are not named) in the instrument

  1. If a trust already exists and the trustee makes a statement that appears to be a declaration of trust over identified dutiable but merely has the effect of acknowledging that identified dutiable property vested or to be vested, in the person making the statement is already held, or to be held, in trust for a named person or persons or for a purpose or purposes mentioned in the statement, it will be liable to duty as an acknowledgment of trust. This is consistent with the Chief Commissioner’s practice before Benidorm.
  2. When confirming existing trust arrangements there may be consequences if you identify the property and the person or persons for whom or the purpose or purposes for which it is held. Words merely referring to an existing trust or to an existing trust deed will not amount to a declaration of trust or acknowledgement of trust. A typical limitation of liability clause would also not generally be a declaration of trust. Generally, documents such as statements and statutory declarations requested by Revenue NSW or other Government Bodies may not be liable as a declaration or acknowledgement of trust. To be a declaration of trust or an acknowledgement of trust there must be a statement by the trustee that the relevant dutiable property is held or is to be held on trust for the identified persons.