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Stamping of Bare Trust Deed
 
 
   

Stamping of Bare Trust Deed (aka Property Custodian Trust) - Everything you need to know!

News | Navjot Kaur | Released: 14/05/2025 | Read: 3 Mins
   
   

When an SMSF acquires property through a Limited Recourse Borrowing Arrangement (LRBA), the asset is typically held in a bare trust (also referred to as a holding trust or custodian trust). This structure separates legal and beneficial ownership, with the bare trustee holding legal title while the SMSF retains beneficial ownership.

However, each Australian state has its own stamp duty laws, and it is imperative that bare trust deeds are lodged and, where required, stamped correctly. This newsletter provides an exhaustive overview of the stamping requirements and risks for NSW and Victoria, the two most common jurisdictions for property investment.
   

Legislative Background
   

Under Section 67A of the Superannuation Industry (Supervision) Act 1993 (SIS Act), trustees of complying SMSFs are allowed to borrow money to acquire assets, provided the property is held in a separate trust by a custodian/bare trustee. The SMSF trustee becomes the beneficial owner, while the custodian holds legal title. Section 62B provides for fixed duty on a Declaration of Trust by Custodian, provided certain conditions are met.

These arrangements are commonly referred to as:

  • Bare trust deeds
  • Custodian trust deeds
  • Instalment warrant arrangements
   

Requirement of stamping

NSW – Under section 54(1) of the Duties Act 1997 (NSW), the Bare Trust deed must be lodged within 3 months of execution for stamp duty assessment, even if only nominal duty is payable ($750 for Declarations dated on or after 1 February 2024)

 

VIC – No duty is payable in Victoria however it is a requirement that the Deed is lodged with SRO. To do this you will need to lodge the Declaration of Trust through an SRO agent on Duties Online or through the SRO’s public lodgement system. 
   

Why Stamping of a Bare Trust Is Important

   

 

  1. Legal Requirement (Especially in NSW):
    In NSW, a Bare Trust (Custodian Trust) deed must be lodged for stamp duty assessment within 3 months of its execution under Duties Act 1997 (NSW), section 54(1).
    While the duty payable is typically nominal value, the act of stamping is legally required.
  2. Penalties for Late Stamping:
    • Interest and penalties apply for late stamping.
    • Penalty rates increase with time and can compound quickly.
    • NSW Revenue may reject or delay future property transactions involving the SMSF if prior documents are unstamped.
  3. Impact on Property Title Transfers:
    • If the trust deed isn’t stamped, transferring legal title from the custodian to the SMSF (e.g. after a loan is repaid) can become complicated or denied by Land Registry offices.
  4. Loan Documentation & Audit Risks:
    • Lenders or auditors may treat unstamped deeds as non-compliant, which could cause issues with limited recourse borrowing arrangements (LRBAs) structure.

                 The ATO requires that LRBA arrangements comply with SIS Act rules. Unstamped or improperly                     structured bare trusts may invalidate the LRBA, meaning: The loan may be considered non-arm’s                   length. The asset could be treated as held directly by the SMSF, risking breach of sole                  purpose test (Section 62 of SIS Act 1993) or in-house asset rules (Section 71 and Part 8 of                         Superannuation Industry (Supervision) Act 1993 (SIS Act). Tax concessions may be lost. 

SMSF auditors are likely to qualify the audit report, affecting fund compliance.

   

Liability & Payment
   
   

1. When does the duty become payable?

    From the date the bare trust deed is first signed.

 

2. Who has to pay the duty?
   The custodian (also called the bare trustee) who declares the trust is responsible for paying the duty.

 

3. What happens if you pay late?

  • Interest will be charged daily until payment is made.
  • Penalty tax may also be added, depending on how late the payment is or if there was a failure to comply.
   

Repercussions of Not Stamping a Bare Trust Deed
   

 

  • Inadmissibility in Court: Section 299(1) of the Duties Act 1997 (NSW) states that an instrument that is liable to duty and has not been stamped is inadmissible in civil proceedings, including disputes or enforcement actions related to the property or trust.
  • Penalties and Interest: If the trust deed is not lodged within 3 months, the Chief Commissioner may impose penalty tax and interest under Section 18 and Section 22 of the Taxation Administration Act 1996 (NSW).
  •  Title Transfer Issues: If the SMSF wants to transfer the title of the property from the bare trustee to the SMSF after the loan is repaid, an unstamped trust deed can result in double duty or denial of concessional duty relief.
  • ATO Compliance Risks: A properly executed and stamped bare trust is a requirement under SIS Act section 67A for LRBA arrangements. The ATO may treat the borrowing as non-compliant, which could result in significant tax consequences for the fund.
StampingofBareTrust
 

New Service Alert: Bare Trust Deed Stamping Made Easy!

We heard you—and we’re expanding our services! 🎉

You can now get your Bare Trust Deed stamped for just $660 (plus government fees).

 

After successfully providing stamping services for Discretionary Trusts and Unit Trusts, we’re excited to announce that Bare Trust (Custodian Trust) Deed stamping is now officially available at Trustdeed.

 

Call us on 02-96844199 to know more.

 

Stay compliant, avoid penalties, and simplify your LRBA process—all in one place.
   
   

Visit www.trustdeed.com.au for more details or call us on(02) 9684 4199
   

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