When Should a Bare Trust Deed be Signed and Stamped

Unfortunately, there is a lot of conflicting information available, and some of it is incorrect. The rules also vary from State to State. This article relates to properties located in New South Wales.

Getting the timing right when signing and stamping a bare trust deed is critical. A declaration of trust over dutiable property is generally liable for full (ad valorem) duty unless a concessional rate applies. For SMSFs, a concessional rate may be available where a custodian (bare trustee) declares a trust over property to be held for the SMSF trustee.

To qualify for the concession, several conditions must be satisfied. The bare trust deed must name the SMSF as the beneficiary, the purchase price must be provided by the SMSF (including through a limited recourse borrowing arrangement), and full duty must have been paid on the contract.

Importantly, the bare trust deed cannot be stamped before the contract. The correct sequence is for the bare trustee company to be established first, contracts to then be exchanged with the bare trustee named as purchaser (with no reference to the SMSF or the bare trust). This is followed by preparing and executing the bare trust deed (this is done after exchange, because at that point the bare trustee has the legal right to acquire the property, so can make the declaration of trust).

The deed should then be stamped at the same time as or after the contract, and within three months of execution.

In practice, we often see bare trust deeds signed — and sometimes even stamped — before contracts are exchanged, particularly where lenders request a stamped deed during the loan approval process. Unfortunately, providing a stamped deed this early is not possible while still complying with the strict timing requirements.

At Penmans, we regularly work with brokers and lenders to explain the correct timing and ensure SMSF property transactions are structured properly from the outset. Getting this right can make all the difference in avoiding unnecessary duty and ensuring the transaction proceeds smoothly.

If you need assistance with stamping a bare trust deed or any SMSF property transaction, our experienced team would be happy to help. You can read more about our SMSF services here.