Law firms now eligible for duty exemption on ILP restructure

The Queensland Government has announced a new state duties full or partial exemption for small businesses restructuring from a sole trader, partnership or discretionary trust structure to a company structure.

This exemption is now available to law firms wishing to transition to an incorporated legal practice (ILP).

Queensland Law Society has long advocated for this duty exemption for legal practices, including most recently in our Call to Parties Statement for the 2020 state election.

The exemption is for transactions from 7 September 2020 where:

  • as a sole practitioner, the principal is the shareholder of the new ILP, and
  • as a partnership, all partners are the shareholders of the new ILP.

Also, the exemption doesn’t apply if assets:

  • are being transferred from an entity with business assets more than $10 million
  • are being transferred from an entity with annual turnover of more than $5 million
  • include residential property
  • are being transferred to a company that has traded before.

To gain the benefit of a full exemption, ownership levels both before and after restructure must remain the same. A partial exemption may apply if the existing owners retain ownership but change ownership levels or introduce new owners.

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This new exemption is also of benefit to small business clients of legal practitioners wishing to transition to a corporate structure.

See details on how to claim the exemption.

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