Stamp Duty and Family Farm Transfers

What is Stamp Duty?

Exciting news! You have signed a contract to purchase a new home and have finally agreed on a purchase price!

You then engage a Conveyancer to handle the transaction and BAM… they tell you about stamp duty. Stamp Duty is the tax that state and territory governments charge for certain documents and transactions.

The Government calculates stamp duty for property transactions using an ad valorem rate, which means the duty is calculated based on the consideration of the transaction.

Essentially – the more expensive your house is – the more you must pay in stamp duty. For example, if you are purchasing a house for $500,000 you will need to pay $21,330 in stamp duty.

Land Services SA also charge a Transfer Registration Fee based on the consideration. This is in addition to Stamp Duty. So, for the above example, the Land Services SA fees would be $4,330.50.

However, there are exemptions for Stamp Duty for eligible transactions. One such transaction is in relation to Family Farm Transfers pursuant to section 71CC of the Stamp Duties Act 1923 (SA).

What is a Family Farm Transaction?

Section 71CC allows an exemption of stamp duty for farm transfers between relatives. That means you can transfer your farm to a family member and not have to pay stamp duty!

Before you start rejoicing, there are obviously some conditions on this exemption which we need to discuss:

What constitutes a ‘farm’?

Your farm needs to be wholly or mainly for the business of primary production and is not less than 0.8 hectares in area.

Who is my ‘family’ under the Act?

  • Your spouse – includes your domestic partner i.e. de facto relationships;
  • Your children and the children of your spouse (including grandchildren and great-grandchildren);
  • The spouses of your children and the children of your spouse (including the spouses of grandchildren and great-grandchildren);
  • Your parents and your spouse’s parents (including grandparents and great-grandparents);
  • Your siblings and your spouse’s siblings; and,
  • Your nieces and nephews and your spouse’s nieces and nephews (including grand nieces and nephews and great-grand nieces and nephews).

It is also important to note that the exemption does not apply to transfers involving the deceased estate of a family member. Therefore, if the transferor or transferee is an executor, the Family Farm exemption will not apply.

What if my relative doesn’t work on my farm?

Unfortunately, you must have had a business relationship with the family member for at least 12 months immediately before the date of the transfer. Evidence of this relationship includes a share farming agreement, partnership agreement, employment history, tax return or the provision of assistance in running the business.

What if my farm is held within a family trust or self-managed super fund?

The exemption still applies if the farm is being transferred to/from a trust. However, you will need to stipulate the beneficiaries under the trusts who have a pre-existing 12-month business relationship with one another. However, the exemption would not apply if the beneficiaries of the trust are not natural persons or not relatives of the transferor.

What about trustee companies?

Transfers involving trustee companies will still attract the exemption as long as the beneficiaries of the trust are natural persons and relatives of the transferor, and a pre-existing 12-month business relationship is present.

How do I arrange to receive the exemption?

Your Conveyancer will arrange this as part of the conveyancing process. They may also require you to seek advice from your Accountant.

For any further information in relation to Family Farm Transfers, please contact the friendly staff at Strathalbyn Conveyancing.