As part of our estate and succession planning practice Johnston Withers provides advice to our rural clients about inter-generational transfers of farming land and farming businesses.
One of the important issues in relation to the transfer of family farming land and farming businesses is the assessment of stamp duty.
The Stamp Duties Act, 1923 provides for an exemption for the transfer of farming land from one generation to the next.
Without the exemption stamp duty is of course a significant expense in the transfer of farming land (for example on land worth say $1million – Stamp Duty is around the $49k mark!)
In order to qualify for the Section 71CC there are a number of conditions which have to be met and include;
- that the land is used for the business of primary production
- that the sole or principal business of the transferor immediately before the transfer is that of primary production
- for a period of 12 months immediately before the transfer there was a business relationship between the transferor and the transferee (Revenue SA can take into account of number of factors in determining whether that business relationship exists)
Often, and subject to accounting advice, farming families take the opportunity to transfer the farming land and farming businesses to Family Trusts which are then controlled by the next generation.
There are limitations on who can be named as beneficiaries of a Trust to which farming land is transferred if the exemption from stamp duty is to be obtained.
In the event a Family Trust Deed is required, we can prepare one that ensures you comply.
Need some succession planning advice? Or want to know if you meet the stamp duty exemption in relation to Section 71CC? Contact us today to speak to one of our specialists.