It Depends – Is there duty payable on a transfer of shares in a private company?

In this week’s edition of ‘It depends’, associate Sacha Robinson talks about whether duty is payable in a transfer of shares in a private company. Sacha explains what corporate trustee duty is and whether there are any exemptions, what landholder duty is, what counts as a ‘significant interest’ and more.

Video transcript

Welcome to today’s edition of It Depends. Today, we will be talking about whether duty is payable on a transfer of shares in a private company.

Is there duty payable on a transfer of shares in a private company?

It depends. Usually, you will not need to pay duty for a transfer of shares in a private company. However, in Queensland in particular, there are two important exceptions that we will run through today, which are corporate trustee duty and landholder duty.

What is corporate trustee duty?

If you acquire shares in a company that acts as trustee for a discretionary trust corporate trustee duty may apply. Corporate trustee duty can also apply where you acquire shares in a company that holds shares in a company that acts as trustee of a discretionary trust.

Are there exemptions for corporate trustee duty?

There are some exemptions to the corporate trustee duty regime, such as where the share transfer is solely to give effect to a change of trustee and also in relation to the family trust exemption, which is where the shares are acquired by a family member or family company who does not hold the shares as trustee and where the relevant trust is primarily for the benefit of a particular family.

What is landholder duty?

In Queensland, landholder duty generally applies when someone acquires a significant interest in a landholder, which can include acquiring shares in a private company.

What is a significant interest?

A significant interest is an interest of 50% or more in an unlisted company or 90% or more in a listed company.

Who is a landholder?

A landholder is an entity that has landholdings in Queensland of an unencumbered value of 2$ million or more. It is important to keep in mind that landholding for a company can include land held by a trust that the company is a beneficiary of. It is important to keep this in mind when you have clients with large group structures with a lot of trusts that may hold land.

What should I do next?

If you are transferring shares in a company, you should always keep in mind whether duty may be payable and whether any exemptions may apply. Please contact myself or a member of our team if you would like to discuss this issue further.