Agri Business

Stamp Duty exemptions for Land Ownership & Transfers

Transfer of Family Farm to related parties

Farming and agribusiness is often a family enterprise which is passed down through the generations of a family.  The structure of an agribusiness is important to ensure the transfer of the business and family property through the generations is seamless and achieves the best tax outcomes and asset protection.

Transfer of property from a person or entity to another shall generally attract stamp duty unless an exemption applies.  The Duties Act 2000 (Vic) provides some exemptions/ concessions available for land transfer duty, however there are two exemptions/ concessions that relate specifically to farming property.  These two exemptions/ concessions are the ‘family farms’ exemption/ concession and the ‘young farmers’ exemption/ concession.

Can we obtain the Family Farm transfer duty exemption or concession?

Section 56 of the Duties Act 2000 (Vic) allows the transfer of a family farm to be exempt from stamp duty provided specific conditions are met, such as the type of transferor and transferee, and the use of the land.

The s 56 exemption provides that the transfer of a farm to a relative or family trust is exempt from stamp duty in the circumstances where:

1. The transferor is either a natural person or a company in which all shares are owned by natural persons who are relatives, or a trustee of a trust of which the beneficiaries are all relatives;

2.  The transferee is a relative of the transferor or is the trustee of a trust, the beneficiaries of which are limited to relatives of the transferor and the terms of which restrict the distribution of the primary production land; and

3. The land is used for primary production and is located outside or partly within greater Melbourne but is not in an urban zone.  The exemption may still apply to land in an urban zone however there are additional requirements that must be met.

For the purposes of this exemption, the State Revenue Office (SRO) take primary production to include, but not limited to:

  • cultivating land for the purposes of selling the production of such cultivation, including in a processed or converted state;
  • maintaining animals or poultry for the purpose of selling them, their offspring or bodily produce;
  • keeping bees for the purpose of selling their honey;
  • commercial fishing, including preparing for such fishing, and storing and preparing fish and fishing gear;
  • cultivating or propagating plants, seedlings, mushrooms or orchids for sale.

Land shall not be considered primary production where any of the above uses are for personal benefit only.  There must be a sale of the product resulting from the primary production activity.

How can Coulter Legal help me?

The transfer of a family farm can be complex and each transfer is unique to each family farm.  Our team is experienced in preparing complex applications to the SRO for assessment and can assist you in ensuring that you have all the necessary supporting documentation to comply with the SRO’s evidentiary requirements.

Young Farmer transfer duty exemption or concession

The future of agriculture is dependent on young farmers.  Division 7 of the Duties Act 2000 (Vic) expresses that the State Revenue Office of Victoria can apply a stamp duty concession or exemption for ‘Young Farmers’ to purchase their first farmland property in Victoria provided certain conditions are met.

What is a Young Farmer?

  • A young farmer is a natural person
  • Aged under 35 years at the date the Contract of Sale is signed
  • Must be the Purchaser and if applicable, their partner’s first farming property
  • Must carry on, or intend to carry on, a business of primary production in relation to the purchased property.

A purchaser who meets the SRO requirements of a Young Farmer, shall have the following benefits of Stamp Duty exemption or reduction:-

$600,000.00 or less – a purchaser who is a young farmer shall pay no stamp duty

$600,001.00 to $750,000.00 – a concession (reduction in stamp duty is available).

Young Farmer FAQ’s

What if my partner is buying the farmland with me and is over 35 years of age?

If your partner is over 35 years of age and is buying the farmland with you, the exemption or concession shall still apply on your share of the farmland.

What if we satisfy the Young Farmer requirements but have already owned a property?

There are no restrictions on ownership of non-farmland property so you shall still eligible for the exemption or concession if you or your partner have previously owned non-farmland property.

What if I am a Young Farmer purchasing in a different structure?

There are different structures by which a person can purchase farmland, the exemption or concession also applies to a Young Farmer business entity which may be a:

  • nomine for a young farmer;
  • Trustee of a discretionary trust, the capital beneficiary of which are limited to a Young Farmer, or the Young Farmer and the Young Farmer’s partner;
  • Trustee of a fixed trust, the beneficiaries of which are limited to a Young Farmer, or the Young Farmer and the Young Farmer’s partner;
  • company (not acting in the capacity of a trustee under a trust) in which all the shares are owned by a Young Farmer, or the Young Farmer and the Young Farmer’s partner;

For more information on the different structures available, click here

What if the farming property is intended to be our Principal Place of Residence?

If you are a first time property purchaser, who is intending to reside in the property being purchased, you may be eligible for both the exemption and concession from duty under section 69AD (the Young Farmer’s exemption) or the concession from duty under section 57J (Principal Place of Residence). You cannot apply both, you must elect in writing to the SRO which exemption/concession you elect to receive.  If you do not elect to receive the Young Farmers Concession you shall not be exempt for further duties concessions under the Family Farms concession.

Can I apply for the Young Farmers exemption/concession retrospectively?

Yes, in most circumstances you can, for further advice on exemptions and concessions please contact us. Please note that where farming property settled prior to 1 July 2018 please contact us as different rates applied prior to 1 July 2018.

What happens if I don’t comply with the Primary Production requirement?

If you receive the Young Farmers exemption or concession and you do not comply with the primary production requirement, the State Revenue Office has the power to reassess the duty on the transfer according to the standard rate of chargeable duty, minus any stamp duty already paid on the transfer.

If you find yourself in a position of not being able to meet the Primary Production Exemption, please contact our Property and Development team to discuss alternative options.

Company/ trust as purchasing entity

To receive the Young Farmer concession the Young Farmer is not required to purchaser the property in their own name.  In the situation where a young farmer purchasers the farming property in a company or trust for asset protection and taxation benefits, the concession/ exemption is still available, however further conditions need to be satisfied for the purchasing entity.

One of the most notable conditions, is that within five (5) years from the settlement date, the young farmer must carry on the business of primary production on the farming property and must be normally engaged in a substantially full-time capacity in that business.  This applies to all contracts executed on or after 20 November 2019.

Disqualifying interests

Each application for Young Farmers is assessed on an individual basis and its merits. Generally speaking an individual shall be disqualified from the Young Farmers exemption/concession in circumstances where you have been named as a beneficiary in a trust or another entity, you may be disqualified, however this shall be assessed on the following:-

  • the class of beneficiary you are;
  • whether or not you are entitled to a distribution of farmland from the entity;
  • how remote your investment is to the farmland; and
  • what was the purpose of the benefit that was personally acquired?

Multiple parcels of land

It is also very common for farming property to be on multiple parcels of land.  For multiple parcels of land, any of the parcels must not exceed the relevant threshold being $600,000.00.  The combined value of all parcels is not taken into consideration and therefore it does not matter if the combined value is over the relevant threshold.

How can Coulter Legal help you?

If you are a young farmer considering purchasing your first farmland, contact Coulter Legal prior to signing the contract for comprehensive advice regarding the correct purchasing entity and structure.

Committed to finding appropriate solutions and strategies for your needs, Coulter Legal shall liaise with your accountant and/or financial adviser, where necessary, to reach a personalised and effective solution for you.

Get in touch with us today

If your require any further information please contact our Agri Business team

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