The Duties Act (2008) WA is the governing legislation for all dutiable transactions in Western Australia. By their very nature, all property transactions in Western Australia are dutiable transactions and accordingly, attract Transfer Duty. However, the Duties Act contains an exemption for certain Family Farm transactions whereby farmland may be transferred between family members (typically parents to children), and be classed as exempt transactions.

In recent years, and largely due to changing interpretation of the Duties Act by the Office of State Revenue, the process for obtaining the Family Farmland exemption has become relatively complex.

The exemption process takes a significant amount of pre-transaction planning and forethought, requiring input from lawyers, accountants and transacting parties to obtain the Family Farmland exemption. Just because the land transaction involves family members and the land is farmland, does not necessarily mean that an exemption will follow. WA Property Lawyers is well placed to assist.

It must be borne in mind that the original purpose of the Family Farmland Exemption was to assist in the intergenerational change of farmland and thereby enable younger farmers to enter the agricultural industry and to continue ownership of farmland within families without the added burden of Transfer Duty. If the transaction does not involve a plan for the transferor (the older generation) to retire from farming that portion of the farm, then the transaction will not be exempt.

This original purpose of the exemption can be seen by looking at the broad requirements of the exemption:

  1. The Parties to the transaction must be family members as defined in the Act.
  2. The Land must be land that is predominantly used for the purpose of primary production.
  3. The Transferor must be using the land in the business of primary production prior to the transaction.
  4. Post transaction the transferor must retire from farming or at least from farming that particular land that has been transferred.
  5. At the time of the transaction the transferee must intend to continue to use the farmland in the business of primary production.
  6. Post transaction the transferee must continue to use the farmland in the business of primary production.

These points seem relatively straight forward but with the interpretation of the exemption provisions being somewhat narrowed in recent years, what may have been classed as a simple transaction in years gone by, certainly takes considerable planning now.

To ensure the transaction will fit the Duties Act requirements, it is important that:

  1. pre and post transaction business structures should be considered and planned;
  2. family relationships are considered;
  3. post transaction land holding structures are considered;
  4. transaction timing and retirement dates are considered.

WA Property Lawyers have the expertise to help and guide you through your succession plans and to assist you in utilising Family Farm Duties Exemptions where applicable.

Farm succession planning is not a simple process, financially, emotionally or legally and all solicitors at WA Property Lawyers have a farming and agricultural background. We are fully aware of the day to day risks that farmers face and are acutely aware of those risks and issues associated with farm succession planning and farm transactions.

With the inherent risk associated with agriculture, the complex task of farm succession planning is certainly not something to be left to chance and we encourage you to contact WA Property Lawyers to assist you with this.