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Off-Market Share Transfers - $50 FEE
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Off-Market Share Transfers - $50 FEE

 

Share registries are starting to charge for transfers that previously were free.


 

     

 

An off-market share transfer occurs when an owner wishes to transfer a share without using a stock broker.

This might occur in a deceased estate, or when an individual wants to make an in specie contribution to a superannuation fund (self managed or otherwise), or transfer the shares to the beneficial owner.  

The latter example is not an uncommon occurrence when shares are acquired under a bequest or given by a grandparent or parent for the benefit of a child.  If the child is underage, then the shares originally would be registered in the name of a parent as trustee.

The share registry claims that there is an unreasonable amount of work required for them to satisfy the identification requirements in the various legislation (Anti Terrorism, Money Laundering) and they have been given permission to charge a $50 fee for the transfer.  They don’t seem to impose the fee for the transfer into/out of a deceased estate.

Where the fee cannot be negotiated away, the options are to have a broker do it or not bother.

The impetus to be bothered is the confusion and extra work that is beginning to occur because trustees holding shares for their children typically quote their own Tax File Number and now the Australian Taxation Office expects that income to be matched in the tax return.  The unsolved problem is, whether the $50 fee is cheaper than the time and debate with the Australian Taxation Office over the correct declaration of income and/or is it necessary when the child becomes of age to transfer the shares into their name.  Quoting the beneficiaries Tax File Number should solve part of the tax problem, but doesn’t always because share registries have a habit of refusing to record the (correct) information.

Other options might be simply selling the share, because the child/adult no longer wants the holding and the original reasons for the acquisition no longer applies or other investment options are preferred.

The usual questions about whether the holding is a genuine trust relationship or not and the ongoing purpose and merits in investment apply.  



12th-May-2013