Avoiding GST on Family Trust transfers

QUESTION: Your articles on transferring commercial property out of family trusts (and into, for example, Self Managed Super Funds) are helpful. However, I still don't understand the GST issues.

What if my client's family trust is not registered for GST?

ANSWER: Your client has a family trust which is not registered for GST.
One of the trust assets is a commercial property. The family trust wants to distribute the commercial property to one of its beneficiaries. This is called an in specie distribution. In these circumstances an in specie distribution is usually not a taxable supply by the family trust. Therefore, there is no GST payable. This is supported by Private Rulings 60695 (2006), 60418 (2006) and Interpretative Decision 2001/503.

As I stated in my previous articles on this topic, if the client's family trust was registered for GST (or was legally required to register for GST) then it is a taxable supply. GST would payable by the family trust. This is the case whether mum and dad as the beneficiaries were registered for GST or not. See Private Ruling 16483 (2002).

When you distribute assets from a family trust and then try and get them into your Self Managed Super Fund many tax issues can arise such as stamp duty, Capital Gains Tax, Fringe Benefit Tax and as you mention GST.

Want to know more:
Self Managed Superannuation Fund Deed - http://LawCentral.com.au/clickthrough/logref.asp?RefID=486&RedirType=doc&...

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