Family Farm Duty Exemption: A Guide for Western Australian Farms
Navigating family farm property transfers can be complex. Provided specific statutory criteria is met, the Family Farm Duty Exemption can provide a duty free transfer of farming properties within a family group. At Granich Partners we specialise in guiding farm related businesses through this process, leveraging decades of experience, ensuring compliance with legislation and the maximisation of tax benefits.
What Is the Family Farm Duty Exemption?
The Family Farm Duty Exemption, under the Duties Act, allows farming property transfers between family members to be exempt from duty. This exemption supports the continuation of family farming operations across generations, ensuring that farming assets stay within the family.
To qualify for the exemption, the following conditions must be met:
Active Farming Requirements
The transferor (seller) must have been actively farming the property immediately before the transaction.
The transferee (buyer) must intend to continue using the property for farming.
Family Member Definition
The transferee must fall within the definition of "family member" as outlined in the Duties Act.
Trust Beneficiaries
If the transferee operates through a trust, all beneficiaries of that trust must also be family members. Trusts may need amendments to meet this requirement.
Key Considerations for Amended Trusts
The legal landscape for trusts and exemptions is nuanced. Historically, farming by an amended trust format needed to occur for a significant time before a transaction agreement could be signed.
Granich Partners’ Expertise in Action
In some cases, we have successfully obtained exemptions with as little as three months of farming under the amended trust format. For example, in June 2021, we secured an exemption for a client whose trust deed was amended just 10 days before the sale contract deadline. Our ability to navigate such situations demonstrates our unmatched expertise and proactive approach.
Understanding Corporate Beneficiaries and Exemptions
Amendments to the Duties Act in June 2019 broadened the eligibility criteria, allowing:
Transferors as Beneficiaries: Transferors can remain beneficiaries of a family trust operating the farm, provided they do not control the trust.
Farming Partnerships: Transferors can continue as members of farming partnerships.
However, exemptions cannot be granted if the trust retains the right to distribute profits to a corporate beneficiary.
Tax Efficiency Opportunity
The 2019 amendments introduced the flexibility to farm "personally or with others," allowing companies to partner in the operating entity. This allows a portion of profits to be taxed at the corporate rate of 25%, offering tax advantages while retaining exemption eligibility.
Why Choose Granich Partners?
At Granich Partners, we are the trusted legal advisors for Western Australian farming families. With decades of experience and a deep understanding of the Duties Act, we help agribusinesses successfully navigate property transfers, trust amendments, and exemption applications.
Our team combines legal expertise with practical insights to ensure your farming business remains viable and thrives across generations. We are your one-stop legal partner, ready to assist with all aspects of succession planning, estate management, and agribusiness legal needs.
Contact Us Today
If you're considering a family farm property transfer or need expert advice on the Family Farm Duty Exemption, reach out to Granich Partners. Let us guide you through every step to ensure your farming legacy continues without unnecessary tax burdens.
Call us on (08) 9324 2111 or simply fill in the form below, and a friendly member of our team will be in touch.
Granich Partners: Trusted by Western Australian Farmers for Generations.