by Michael Taylor, Director – Cullen Macleod Lawyers
For many farming families in Western Australia, passing the farm to the next generation can be a major financial milestone — and potentially a costly one because of transfer (stamp) duty. Fortunately, the Family Farming Exemption under the Western Australian Duties Act 2008 can often help eligible families transfer the family farm without incurring transfer duty.
What Is the Family Farming Exemption?
The Family Farming Exemption means no transfer duty is payable when farming property is passed between family members, provided specific conditions are met. It applies when the farming land is used “solely or dominantly” for primary production (e.g., growing crops or livestock) and the transfer is between qualifying family members.
Who Qualifies?
To use the exemption:
- The land must be farming property — used primarily for agricultural or related primary production activities.
- Both transferor and transferee must be family members. “Family member” includes children & grandchildren, parents, siblings, spouses & de facto partners.
- The transferor (seller) must have been farming the land immediately before the transfer, and the transferee (buyer) must intend to continue farming it.
Importantly, the exemption can apply whether the transfer is a sale or a gift; it is not limited to gifting arrangements.
Common Pitfalls & Things to Watch
Before relying on the exemption, families should be aware of several important conditions:
- Active farming requirement: each transferor should be able to demonstrate they have been actively farming the land before the transfer. Each transferee should be able to demonstrate an intention to farm the land after the transfer.
- Entity structures matter: Farms held in certain trusts or corporate structures may still qualify, but trust deeds, and ownership structures must be carefully checked — particularly where discretionary trusts or are involved as some ownership structures will not qualify.
- Repeated transfers: If the exemption was utilised in respect of a piece of land within the last five years, a new transfer of the same property may not be exempt and duty may apply.
- Documentation: A formal application and supporting documents (including tax returns, proof of beneficial ownership, proof of farming activities and relevant trust deeds and/or partnership agreements) are required to claim the exemption.
Conclusion
The Family Farming Exemption is a valuable tool for WA farming families when planning their succession. With the right circumstances and documentation, families can often transfer the family farm to children or other relatives without the burden of transfer duty — whether by sale or gift — as long as the requirements of the exemption are met.
If you’re considering such a transfer, speak to us early in the peace to identify if the exemption applies and ensure it is properly claimed.
