Transfers of farming property within a family group are exempt from duty provided that the transfer satisfies the statutory criteria. 

To obtain the Family Farm Duty Exemption, the Duties Act requires that: 

1. the transferor (who must be an individual) was actively farming the property immediately before the transaction took place and when the transaction takes place, each transferee intends to continue to use the farming property; and

2. the transferee must be a family member of the transferor as the term ‘family member’ is defined in the Duties Act; and

3. If the transferee or the operating entity is a trust, all beneficiaries must be family members of the transferor. This usually means that existing trusts need to be amended to narrow the beneficiaries to family members. 

Trust in amended Format

The general legal view has been that farming by the trust in that amended format needed to be carried out for some considerable time before the transaction agreement is signed in order to qualify for the exemption.  

In the past we have had exemptions granted when the trust in the amended form had been farming for as little as three months before the transaction agreement was signed. In early June 2021, we received instructions to apply for the exemption in circumstances where the sale contract had to be signed by 30 June. We obtained the exemption even though the trust deed was amended only ten days before the sale contract was signed. It was comforting to know that the Office of State Revenue took a broad view in its interpretation of the legislation. 

Corporate Beneficiaries

Amendments made in June 2019 to the Duties Act, broadened the exemption to:

1. allow the transferor to be a beneficiary of a family trust that owns or operates the farm provided the transferor does not control the trust; and

2. allow the transferor to remain a member of the farming partnership. 

However, you still cannot obtain the exemption if you wish to retain the right to distribute from the trust to a corporate beneficiary. 

Interestingly, the 2019 amendments also provide that a person is still entitled to the exemption if they farm “personally or with others”. This would allow a company that may otherwise have been a corporate beneficiary to be a partner of the operating entity and have its portion of profits taxed at 25 per cent.