Business NSW New England North West says a proposal to ensure discretionary trusts are not hit with stamp duty liabilities would provide welcome certainty for thousands of small and family-run businesses across the region.
The state’s peak business organisation has backed the NSW Government’s commitment to ensure the initial decision to become an Excluded Election Trust does not trigger NSW stamp duty.
The move has been triggered by legislation before Federal Parliament which seeks to increase taxes on discretionary and family trusts, which are central to the operation of many small and medium businesses.
Business NSW New England North West Regional Director Stephanie Cameron said reducing the cost of doing business was a key priority for businesses across the region.
“New England North West is home to around 21,500 businesses, and small business is the backbone of our regional economy.”
“Across NSW, around 98 per cent of businesses are small businesses, so changes that create additional tax, compliance or administrative costs have the potential to be felt very widely.”
“Reducing the cost of doing business is one of the clear priorities we are hearing from businesses across New England North West, alongside addressing housing shortages, workforce and skills pressures, infrastructure and the conditions needed to support regional growth.”
“Regional businesses are already managing significant cost pressures and growing compliance obligations. They should not face an unintended stamp duty bill simply because they need to respond to changes in federal tax arrangements.
“This proposal provides greater certainty and avoids adding another unnecessary cost for businesses at a time when we should be making it easier, not harder, for them to operate, invest and grow.
“Our latest Business Conditions Survey found 35 per cent of businesses want reducing taxes and charges to be the top priority for the next NSW Government.
“For a region dominated by small and family-run enterprises, getting these policy settings right matters. Every additional cost ultimately affects the capacity of regional businesses to invest, employ people and contribute to their local communities.”
Kylie King, Partner, Business Services, Roberts + Morrow, said the distinction between the available pathways was important. The key point is that the Federal Government’s proposed rules involve a new election and nomination process. There has been uncertainty about whether those steps could create a state duty liability.
“The real issue is whether businesses utilising the Transitional Restructure Rollover will receive sufficient stamp duty relief, particularly where land or other dutiable property is involved. Businesses taking a different route to comply with the new tax rules could still face real restructuring costs.”
Paul Williams, Partner, Roberts + Morrow Legal, said the key issue was how the different pathways could affect businesses’ circumstances. “The Government is promoting relief for a transaction that might not have attracted duty anyway. The Federal Government says the election is not expected to attract state or territory stamp duty, and NSW is proposing to clarify that treatment. However, a trust might instead restructure into a company or fixed trust. While the Transitional Restructure Rollover can provide income tax and CGT relief for eligible transactions, that does not automatically eliminate stamp duty on every asset transfer.”
Kylie added, “Use the time available to speak with your adviser, understand whether the proposed rules are likely to affect you and work through the options for your particular circumstances before any decisions need to be made.”
Under the commitment, a re-elected Minns Labor Government would amend existing regulations to clarify that the decision to become an Excluded Election Trust is not a taxable event for NSW stamp duty purposes.
The proposed change would be developed following consultation with small business organisations and representatives, which would begin after Federal Parliament finalises the relevant legislation.
Media Release: Business NSW New England North West
