Structure of a Transaction - Careful what you choose




Whilst the particulars of this SAT decision revolves around the nature of property held under a partnership and trust arrangements – the issue I see worth considering is the importance of the structure or steps in drafting agreements to reflect the transaction. It may have been possible to proceed with an agreement to distribute and follow the requirements for nominal assessments under the WA Duties Act.

In summary, as described in the judgement…

“Those properties were the partnership property of the Scolaro Investment Company Partnership, the partners of which were Anthony, Maria and their children. They were also registered proprietors of property in Northbridge, Nedlands and Osborne Park, those being the partnership property of the A & MMR Scolaro Partnership. The partners of that partnership were Anthony and Maria only. ,Anthony Scolaro passed away in February 2011, and both partnerships dissolved. In September 2011, Maria Scolaro became the sole registered proprietor of the relevant properties.,In 2013, Maria Scolaro executed two deeds in relation to the winding up of respectively, the SICP and AMSP Partnerships. The deeds each stated that Maria Scolaro held the relevant properties on trust for the former partners (or the former partner’s deceased estates) of each of the partnerships. Maria Scolaro then transferred the relevant properties to a new trustee company (the applicant in this matter).,Both 2013 deeds were lodged with the respondent for the assessment of duty, along with the transfer of land to the applicant. The respondent issued the applicant with a duties assessment notice, against which the applicant lodged an objection. The Commissioner allowed the objection, but only in part, and the applicant sought a review of the Commissioner’s decision at the Tribunal.,The issue before the Tribunal comprised a narrow legal question. The applicant said that, on dissolution of the relevant partnerships, the former partners had an identifiable beneficial interest in the land. It therefore argued that the 2013 deeds executed by Maria Scolaro merely confirmed that the land continued to be held on trust, and were not ‘declarations of trust’ for the purposes of assessing duty. The Commissioner, on the other hand, considered that the 2013 deeds were new declarations of trust and as such attracted duty.,The Tribunal considered both the applicant’s and respondent’s arguments and the relevant principles in relation to the nature of partnership property. The Tribunal concluded that the 2013 deeds created new equitable interests in the partnership properties, and therefore attracted duty.,The applicant also said that, if the 2013 deeds were found to be declarations of trust, then a reduction in duty should be allowed under s 78 of the Duties Act 2008 (WA). The Tribunal also rejected this argument.,The applicant’s application was dismissed.”

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