New ruling from Revenue NSW: where beneficiaries vary Will gifts

It is commonplace for Wills to be drafted to leave the rest and residue of an Estate equally between children, or a spouse and children. It is also not uncommon for beneficiaries to come to alternate arrangements to ‘swap’ the form of their entitlements under a Will, such as receiving Real Property instead of cash.

A new ruling from Revenue NSW highlights potential duty and tax consequences, if beneficiaries do not receive their entitlements as set out in the Will, and why it is important that your Will is drafted with appropriate wording to provide powers to your Executor to effect transfers in different ways.

Stamp duty

Generally, a transfer of Real Property (i.e. a house, unit, land) will be liable for payment of stamp duty. There are some exceptions and concessions, including in relation to deceased estates.

Duty payable for deceased estate transfers

Section 63(1)(a) of the Duties Act 1997 provides that duty of $50 is payable where the Executor of your estate transfers Real Property to a beneficiary:

  1. Under and in conformity with trusts contained in your Will (or arising under intestacy, if you do not have a Will);
  2. As the subject of a trust for sale contained in your Will;
  • As an appropriation of your Real Property in or towards satisfaction of the beneficiary’s entitlement under your Will (or arising on intestacy) carried out in accordance with section 46 of the Trustee Act 1925.

Section 63(2) provides that a portion of the dutiable value of a property be reduced in accordance with the portion that a beneficiary is entitled to, where a transfer is made by your Executor under an agreement, such as a Deed of Family Arrangement, between one or more beneficiaries, to vary the trusts contained in your Will (or under intestacy).

Deed of Family Arrangement

First example: Ally and Bob come to an agreement where rather than selling a Real Property and distributing proceeds of sale equally between them, together with proceeds of bank accounts and sale of shares:

  1. Ally and Bob obtain a valuation for stamp duty purposes of the deceased’s Real Property;
  2. Ally seeks to retain the deceased’s Real Property, and agrees that Bob receive cash and shares from the Estate equating to the value of half of the Real Property;
  3. Bob agrees to accept half the value of the Real Property in cash and shares,
  4. Ally and Bob execute a Deed of Family Arrangement recording the agreement.

Second example: there are two Real Properties – Ally and Bob agree to each retain one property, rather than selling both and equally distributing the proceeds of sale.

What the new Ruling says

Ruling DUT 046 issued on 12 February 2020 confirms that a transfer must be made both under and in conformity with the trusts of the will. Where a Deed of Family Arrangement varies the trusts contained in your Will, the transfers in the above situations may not be considered under and in conformity with the Will.

In the first example, Ally is liable to pay stamp duty on half the value of the Real Property.

In the second example, Ally and Bob are both liable to pay stamp duty on half the value of the respective Real Property transferred to them.

Trust for sale

If your Will directs your executor to sell Real Property and distribute proceeds of sale to beneficiaries, and the beneficiaries, Ally and Bob, choose to transfer the property in accordance with their entitlements under the Will, rather than take proceeds of sale, the duty payable for each transfer is $50.


If your Will provides for your Executor to exercise a power of appropriation, your Executor is able to appropriate the relevant assets, which means section 63(1)(a)(iii) applies and the transfer is liable to $50 duty only. The Executor must ensure that:

  1. The appropriation does not prejudice any specific gift;
  2. The beneficiary must have given written consent to the Executor;
  3. They have considered the rights of any unborn, missing, or other persons (apart from the recipient beneficiary).

Capital Gains Tax

It may be more tax effective for your Executor to appropriate assets your assets between residuary beneficiaries, rather than using a Deed of Family Arrangement: an appropriation that provides no more than a beneficiary’s entitlement does not trigger a CGT liability (see Income Tax Assessment Act s97 on CGT death rollover for more information).


You can only contemplate what arrangements your beneficiaries may come to in varying entitlements under your Will. To minimise duty payable, you may wish to consider leaving specific properties to specific beneficiaries in your Will, seek financial advice for further information in regards to taxation consequences, or contact our office for advice in relation to your Will.

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