Self-assessing a partial vesting of a discretionary trust

An application for a partial vesting of a discretionary trust can be self-assessed if:

• an asset of the discretionary trust was vested to a beneficiary where no consideration is paid, including any liabilities assumed or debt forgiven
• the beneficiary was a beneficiary of the trust when the property was initially acquired in the trust and
• foreign transfer duty does not apply.

This applies to transfers of land, and agreements to transfer land, from a trustee of a discretionary trust to a beneficiary of the discretionary trust for no consideration as a partial vesting. Nominal duty applies to these transactions where the criteria of section 115 of the Duties Act are satisfied.

A termination of a discretionary trust must be lodged with the Commissioner for assessment.

If self-assessing a transaction that involves vesting of a discretionary trust, the lodging party must retain:

• a copy of the duty endorsed agreement and/or declaration of trust which evidences the property being acquired by the trustee as trustee of the discretionary trust.
• a copy of the discretionary trust deed (and any amending deeds).
• a copy of the financial statements for the discretionary trust for:
  • the 30 June immediately prior to the transaction date and 
  • the 30 June for the prior financial year 

as these may need to be provided as evidence in the course of an audit or investigation.

Example

Bob Smith is the trustee of the Smith Family Trust and decides to vest part of the trust fund property to the beneficiary, Mary. Bob executes a transfer of land pursuant to a deed of vesting transferring a property to Mary. The transfer of land can be self-assessed.