Acknowledgement of Trust – ‘AFTER the Trustee buys’ (Deed of Confirmation)

Acknowledgement of Trust defeats Stamp Duty Office – again!

You buy a property in your name, but someone else provides the funds. You hold it as a ‘bare’ trustee for the true owner, the beneficiary. In the rush, you forget to sign a Declaration of Trust before purchase.

Years later, the accountant or the tax office demands proof:

“Where is the evidence that you are not the real owner?”

To fix the paperwork gap, you sign a deed to confirm the identity of the true equitable owner. The Revenue Office attacks. It claims this ‘confirmation’ is actually a new trust. It demands that you pay transfer (stamp) duty a second time.

This nightmare scenario happened in Campbelltown Central 2 Pty Ltd v Chief Commissioner of State Revenue.

1. The Campbelltown Central case

Forgot to document the Bare Trust before buying

In Campbelltown Central 2 Pty Ltd v Chief Commissioner of State Revenue [2025] NSWSC 1568, four companies bought commercial properties in NSW:

• A different company, ‘Al Maha’, paid for them. Al Maha was the true ‘beneficial owner’ (Beneficiary).
• The four companies were just ‘legal owners’ (Bare Trustees)

They forgot to sign a Declaration of Trust at purchase. This oversight left them exposed.

Years later, they signed a ‘Confirmation Deed’. It simply acknowledged a set of past facts: Al Maha always owned the properties beneficially. But the State Revenue Office pounced. It argued that this administrative fix created a whole new trust. It demanded $3,791,208 in transfer duty.

Why ‘Acknowledgement’ is safer than ‘Declaration’ (Campbelltown Central Case)

The taxpayers fought back. They went to the Supreme Court.

Justice Bennett ruled in favour of the taxpayers. He cancelled the $3.7 million tax bill.

Why? Because of how the Acknowledgement of Trust was drafted. Thankfully, it was not drafted as a Declaration of Trust. A Declaration of Trust must be signed at the time of purchase.

The Judge looked at the specific words in the confirmation deed and noted in paragraph 48:

The text … directs attention to the existing state of affairs. That clause says Al Maha “holds” the beneficial interest in the relevant property and “has held such beneficial interest” since a date in the past (namely, the Date of Acquisition).

Read together, the use of words such as “holds” and “has held since [a past date]” reinforces the idea that the words “acknowledges and confirms” in the chapeau are being used to acknowledge and confirm whatever existing relationship there is between the parties.

At the very least, those words to me do not seem aimed at creating some new legal relationship between the parties. Words like “holds” and “has held” state what the past was and present is. To me, read together, they do not work to affect the relationship between the parties going into the future.

[Note, the expression [a past date] was not inserted by the author.]

In legal drafting, a chapeau (French for “hat”) is the introductory text of a clause that sits above a list of sub-clauses or bullet points. Because the “hat” (chapeau) used the words “acknowledges and confirms” (which look to the past), every bullet point underneath it had to be read as confirming the past, not creating a new future.

The deed used the words “acknowledges and confirms”:

• Acknowledge: Records a previously existing state of affairs.

• Confirm: Merely sets out past events.

The Judge held that the Acknowledgement of Trust did not create a new trust. It merely looked back at the past. It confirmed the status quo. Therefore, no extra transfer (stamp) duty was payable.

How Legal Consolidated protects you when you forget to document the trust relationship

You can build two different types of bare trusts on our law firm’s website:

1. Declaration of Trust BEFORE you buy: This is the gold standard. You must sign this before signing the contract of sale. It proves that the trust exists from day one. There is no ambiguity.

2. Acknowledgement of Trust: What do you do if you forget to sign a Declaration of Trust at the time of purchase? An Acknowledgement of Trust fixes the paperwork gap, but only if the trust genuinely existed from the outset and can be proved.

Our Acknowledgement of Trust complies with the Campbelltown Central case. We use the correct “acknowledgement” language. We make it clear: no new trust is created.

When you build the Acknowledgement of Bare Trust on our website, it confirms that the:

• bare trust already exists.

• beneficial owner always held the interest.

• legal owner is merely confirming the facts.

How to prove the Bare Trust existed when you forget to sign a Declaration of Trust

The “Confirmation Deed” (Acknowledgement of Trust) is the most important document. But it is not enough on its own.

In Campbelltown Central, the Court did not rely solely on the deed. It looked at the history.

The Chief Commissioner argued the deed was a sham. It was attempting to hide the existence of a “new” trust.

To defeat the Revenue Office, the taxpayer must prove that the trust existed from the start.

In this instance, under section 100(3) of the Taxation Administration Act 1996 (NSW), the taxpayer has the “onus of proof”. This means it is the taxpayer’s job to prove the Tax Office is wrong. This is a reverse of the usual onus of proof. A higher level of evidence is also often required for asset protection, bankruptcy, divorce, and other court matters.

A paper trail is needed to support the Acknowledgement of Trust

Justice Bennett looked for objective evidence in Campbelltown Central. He wanted to see whether the parties acted as if a trust existed.

When you build your Acknowledgement of Trust with Legal Consolidated, you must also gather this evidence:

1. Who paid the money? (Critical) In Campbelltown Central, the company ‘Al Maha’ paid the purchase price. You must show bank statements proving the money came from the Beneficiary, not the Trustee.

2. Financial Statements In Campbelltown Central, the accountant prepared financial statements showing the beneficial ownership. The Judge noted this at paragraph [73] of the judgment.

• Do: Ensure your tax returns show the asset belongs to the Beneficiary. The Beneficiary declares the income and expenses on its tax return.

• Do not: Claim the asset as the Bare Trustee’s asset in one year, and then swap it later. Consistency is key.

3. Emails and Letters What do the emails between the parties to their lawyer and accountant say? Did you say, “Buy this property for the Beneficiary”? Hunt down and protect old emails. They are “contemporaneous evidence”. They help prove your intention at the time of purchase.

4. The Bank Accounts Who receives the rent? Who pays the rates? Under a Bare Trust, the Beneficiary gets the income. The Beneficiary pays the costs. If, instead, the Bare Trustee (the legal owner) retains the rent, it appears the Trustee is the beneficial owner. This destroys your argument.

2. The Benidorm Case

Acknowledgement of Trust vs Declaration of Trust: The Benidorm Case

Three years earlier than Campbelltown Central, the same state revenue office had another loss. This older case is Chief Commissioner of State Revenue v Benidorm Pty Ltd [2020] NSWCA 285.

This case also confirms that an Acknowledgement of Trust works. But only if the deed is drafted correctly.

The Facts of Benidorm

1. The Company: Benidorm Pty Ltd was incorporated in 2007. Its sole purpose is to buy a Sydney penthouse for $12.5m.

2. The Money: A client, Mr Robinson, provides the money. Mr Robinson lives in Guernsey.

3. The Trust: Benidorm Pty Ltd signs a Declaration of Trust before it buys the penthouse. This type of bare trust declares it holds the property as a ‘bare’ trustee for Mr Robinson.

So far, so good. The structure is perfect.

The equitable owner dies in the Benidorm case

Mr Robinson dies in 2013.

His friend, Mr Stubbs, is the sole executor and beneficiary of Mr Robinson’s estate. Under a Will, assets moving from a dead person to a beneficiary do not suffer transfer duty. The transfer is stamp duty-free.

Mr Stubbs wants to tidy up the paperwork. Mr Stubbs signs a written confirmation that the bare trustee (Benidorm Pty Ltd) now holds the beneficial interest in the penthouse for Mr Stubbs.

So, in 2015, Benidorm Pty Ltd and Mr Stubbs signed a deed of Acknowledgement of Trust.

The deed “acknowledges” that the company now holds the penthouse for Mr Stubbs.

The State Revenue Office attacks the confirmation deed in Benidorm

The State Revenue Office reviews the 2015 Acknowledgement of Trust deed.

Just as it did in the Campbelltown Central case, State Revenue argues that the 2015 Acknowledgement is really a Declaration of Trust. It argues that it neither acknowledges nor confirms. Instead, it argues that the trust transfers the penthouse to Mr Stubbs.

If the Revenue Office’s interpretation were correct, the document would be classified as a ‘Declaration of Trust,’ triggering full ad valorem transfer duty. Proceeding on this basis, the Revenue Office issued an assessment for $710,000. It argued that, regardless of Mr Stubbs’ intention, the deed legally established a new trust over the penthouse.

Decision of the Benidorm case

Benidorm Pty Ltd disagrees. It goes to the Supreme Court and wins.

The Chief Commissioner, refusing to accept the umpire’s decision, seeks the superior court’s view. On appeal:

• The Question: Does an “Acknowledgement of Trust” trigger transfer duty?
• The Decision: The Court of Appeal dismisses the Tax Office’s claim. The $710,000 tax bill is thrown out.
• The Reason: The Court looks at the definition of “Declaration of Trust” in section 8(3) of the Duties Act 1997 (NSW).

The Benidorm judges state:

• for a document to be taxable, it must actually effect the transaction. It must transfer the penthouse.
• The 2015 Acknowledgement of Trust did not create a new trust. It merely acknowledged a fact. The fact was that Mr Stubbs (as executor) had already inherited Mr Robinson’s interest.
• The Acknowledgement of Trust, true to its name, merely confirmed the past. It did not create a new future. It changed nothing. It simply recorded the status quo.
• Therefore, no transfer duty is payable.

How Benidorm stops double transfer duty for a bare trust

The Benidorm case confirms that you can sign an Acknowledgement of Trust after you buy an asset.

However, the drafting is critical:

• If the deed “declares” a trust, you pay transfer duty.
• If the deed merely “acknowledges and confirms” a trust, and the facts support this, you generally do not pay transfer duty.

Legal Consolidated’s Advantage: Our Acknowledgement of Trust is drafted to rely on the Benidorm decision.

• We do not “declare” a new trust.

• We “acknowledge and confirm” the existing trust.

3. What do Campbelltown and Benidorm teach us? The National Threats

While the Benidorm and Campbelltown cases were fought in New South Wales, the risk is not contained to one state. State Revenue Offices across Australia are aggressively targeting “Acknowledgements of Trust” using different weapons.

NSW: The ‘Anti-Benidorm’ Law (Section 8AA)

After losing the Benidorm case, the NSW Government changed the rules (but not in time for Campbelltown). In May 2022, they introduced Section 8AA into the Duties Act 1997 (NSW).

• The Trap: Section 8AA taxes instruments that purport to be declarations. History is not irrelevant, but it is far easier for Revenue NSW to ignore it.

• The Result: If you sign a deed today in NSW that looks like a trust deed, you pay duty on the full value of the asset, regardless of history. Unfortunately, the legislation looks to form over substance. This is a considerable risk to lawyers drafting these deeds.

Victoria: The ‘Change in Beneficial Ownership’ Net

The State Revenue Office (SRO) in Victoria does not require a specific “Section 8AA” because it has a broader tool: the “Change in Beneficial Ownership” provisions.

• The Trap: The Victorian SRO is aggressive. If you cannot clearly prove that the trust existed from day one, they treat the Acknowledgement itself as the moment the beneficial ownership changed. 

• The Result: They assess full duty on the date you sign the Acknowledgement.

Western Australia & South Australia: The “Evidentiary” Trap

These states have legislation that is even more direct than the Benidorm principles.

• The Trap: In WA and SA, the definition of a “Declaration of Trust” often includes any instrument that “acknowledges, evidences, or records” a trust.

• The Result: The moment you write it down, you trigger the definition of a dutiable transaction.

Queensland: The “Creation” Focus

The Queensland Revenue Office (QRO) focuses on the ‘creation’ of a trust.

• The Trap: If you cannot prove the trust was created years ago (with a stamped contract or clear money trail), the QRO views your Acknowledgement Deed as the creating instrument.

• The Result: You pay duty at current market rates, plus unpaid tax interest dating back to when the trust is believed to have started.

4. Best practice in drafting an Acknowledgement of Trust

To survive this national minefield, a deed must be purely evidentiary, never transactional.

The four rules in drafting an Acknowledgement of Trust:

1. The ‘Negative Pledge’

Regulators in NSW, WA, and SA look for documents that “declare” or “create” rights. We explicitly rebut this in the document itself.

• Strategy: We include a clause stating: “This instrument does not purport to be a declaration of trust over dutiable property, but is solely a written manifestation of a pre-existing trust.”

• Why it helps: It seeks to avoid the statutory trigger in NSW (section 8AA) and creates a strong argument in WA and SA that the instrument is not the source of the trust. It supports an argument against characterisation. It does not defeat section 8AA by itself. 

2. A “Declaration” creates rights. An “Acknowledgement” records facts.

A “Declaration” creates rights now (Present/Future tense), whereas an “Acknowledgement” records facts then (Past tense).

• Bad Drafting: “The Trustee will hold the property…” (Looks like a new trust).

• Safe Drafting: “The Trustee has held the property since the date of acquisition…”

• Why it helps: In Victoria, Queensland, and Western Australia, this reinforces that the dutiable event happened years ago (when the property was acquired), not today. It shifts the argument from “paying duty now” to “proving duty was paid (or not needed) then.”

3. The “Dormant Powers” Strategy

Banks often force you to list powers (e.g., “Power to Mortgage”) in the deed. Regulators take advantage of this. They argue that granting these powers creates a new trust.

• Strategy: We list the powers but define them as historical and dormant.

• Safe Drafting: “The parties confirm that the Bare Trustee has possessed these powers since the date of acquisition… they are administrative only.”

• Why it helps: You satisfy the bank’s need to see the powers written down, but you deny the Revenue Office the ability to say you are granting new authority.

4. The “Severance” Circuit Breaker

If a judge or revenue office decides that one clause crosses the line, we do not want the entire deed to become dutiable.

• Strategy: We include a “National Severance Clause.”

• Safe Drafting: “If any clause is construed as constituting a declaration of trust under the Duties Act of the relevant jurisdiction (including Section 8AA in NSW), that clause is deemed to be severed or read down.”

• Why it helps: It limits damage. If a clause is truly incidental and goes too far, it can be cut out without infecting the rest of the deed. It is a circuit breaker, not a guarantee. If the deed is dutiable in substance, severance will not save it.

What is a ‘Bare’ Trust?

Now that you understand the legal battles and how to win them, let us clarify the fundamental structure we are protecting. We have been using the term ‘bare’.  Bare trusts differ from SMSFs, Family Trusts, and Unit Trusts. So, what is a ‘bare’ trust?

Here is an example of a ‘bare’ trust. When the son is born, Dad opens a bank account in trust for him:

• Dad is the trustee: Only the legal owner. Not the beneficiary owner. (Bare Trustee)
• The trust’s beneficiary is your son: the true owner, the ‘object’ of the trust, holder of the equitable interest. (Beneficiary)
• The trust asset: is the asset that the Bare Trustee purchased or holds for the Beneficiary. E.g. bank account (Trust Asset)

In this example, Dad holds the bank account in trust for his son. Dad’s name appears on the bank account. But merely as the ‘legal owner’.

The ‘true’ or ‘beneficial’ owner is the son. The son is the ‘equitable’ owner. He owns the asset in equity.

Who pays tax on your son’s bank account held in trust?

The son pays tax on the interest earned on the bank account. When your son turns 18, he can remove you as trustee. And instead, replace you with:

• another bare trustee; or
• himself as the ‘legal owner’ (at which point the trust no longer exists because the ‘legal’ and ‘beneficial’ owners are one and the same)

The Trustee protects the Trust Asset for the Beneficiary

The Trustee suffers a terrible burden. As a trustee, it is duty-bound to act in the Beneficiary’s best interest at all times. It must protect the Trust Asset.

What happens if the Bare Trustee goes bankrupt?

If you, as the Bare Trustee, go bankrupt or get a divorce, then the Trust Asset is not lost. The bank account is preserved for your son, who, as beneficiary, is the ‘true’ owner of the asset. The courts and the ATO ‘look through’ the trust. They see who the ‘true’ owners of the assets are. In this case, the ‘true’ owner is your son. Not you.

This is provided you can prove that you hold the asset in trust for your son. This should be documented by a:

1. Declaration of Trust BEFORE the Bare Trustee acquires the asset (preferable)
2. Acknowledgement of Trust AFTER the Bare Trustee acquires the property (better than nothing). Start building this document for free. Read all the free hints. Press the Start Building for free Button above.

To be a ‘trust’, the asset must be in the name of two different groups: the trustee and the beneficiary

Most people who hold an asset hold both the ‘legal’ and ‘beneficial’ interests in it.

There is no trust structure if you hold both legal and beneficial ownership. (The trust is gone. It vested in the beneficiaries.) For a trust relationship to exist, the ‘legal’ and ‘beneficial’ interests must be held by different people:

• One person is the legal owner: the trustee.
• The other person is the beneficial owner: the beneficiary.

A trust automatically exists when you separate the ‘legal’ and ‘beneficial’ ownership. Conversely, the trust automatically ends when the ‘legal’ and ‘beneficial’ ownership is held by the same person(s).

For example, if your son, at 18, removes you as trustee and appoints himself as the legal owner, the trust terminates. It is extinguished. This is because your son now holds both the ‘legal’ title and ‘beneficial’ interest. The ownership split has been finalised. Therefore, the trust relationship no longer exists.

What ‘assets’ can you put in a trust?

The trust asset can be anything. It can be real estate, shares, artwork, cars, bank accounts and cash. It can be a right like a debt someone owes. It can be a right to purchase something.

One great strength of Trusts is that they are mostly unregulated and private. Aside from disclosing a trust to the family court, bankruptcy court, and government regulators such as the Australian Taxation Office, the trust relationship can be kept confidential.

What are the three types of bare trusts in Australia?

These are the three main types of ‘bare’ trusts you build on our website:

Bare Trusts:
1. Acknowledgement of Trust Deed – AFTER the Trustee buys
2. Declaration of Trust BEFORE you buy – BEFORE the Trustee buys (Secretly buy)
3. SMSF Custodian Bare Trust Deed – SMSF borrows through a bare trust

How do you document an Acknowledgement of Bare Trust?

Sometimes, in the heat of the moment, you forget to sign a Declaration of Trust BEFORE You Buy. While your bare trustee proceeds to buy the asset for you, there is no formal Declaration of Trust deed to confirm the trust relationship. Trust relationships exist whether they are in writing or not. They are much easier to prove when everything is in writing.

Whether there is a deed or not, the trustee still ‘owns’ the asset solely as a trustee for the beneficiary.

The Acknowledgement of Trust is drafted after the above purchase by the trustee. The Acknowledgement of Trust serves only to document what has occurred. It is not trying to rectify or change anything; it is merely documenting what actually happened.

It would have been better to have documented this trust relationship BEFORE the trustee acquired the asset. Before the trustee acquired the asset, you should have built and signed a Declaration of Trust BEFORE You Buy. But you did not. You are now documenting your past actions with an Acknowledgement of Trust. You are confirming and acknowledging past events. It is better late than never. You are not rectifying a past mistake. You are clarifying a past event.

Confirmation Deed merely confirms what happened in the past

The Acknowledgement of Trust merely sets out the facts that took place in the past. It merely confirms what happens. As an example, you may say:

‘Yes, as a bare trustee, I acquired the asset, but it was, at all times, for the benefit of the beneficiaries. I have no interest in the asset other than as the bare trustee. The money to pay for the asset came from the beneficiary, not from me. And I have plenty of evidence like bank account records, statutory declarations and emails to prove this.

Sure, perhaps I could have documented this a bit better at the time. But that is what this Confirmation Deed is doing.’

All the Acknowledgement of Trust does is record, by way of a Deed, the trust relationship that already exists.

However, there is a real risk that the:

1. Stamp Duty Office
2. ATO for Capital Gains Tax
3. Bankruptcy Court
4. Family Court

may not believe your story. They may impose transfer duty and CGT on the Acknowledgement of Trust Deed. Be careful. Make sure you have sufficient evidence that, at all times, the beneficial owner was and remains the beneficiary (e.g., bank transfers, bank statements, emails).

You need to demonstrate that this Acknowledgement of Trust makes no change. It merely confirms. You were always the trustee of the asset for the beneficiary. You need evidence that it has always been the case.

Why did the beneficiary want you, as trustee, to acquire the asset as trustee in the first place? There are many reasons – both personal and private. For example, the beneficiary may have wanted you to buy the asset as trustee because the beneficiary did not wish the vendor, the public or a spouse to know what the beneficiary was up to.

Purchase a property for a child

Yes, both the Legal Consolidated Declaration of Trust before you buy and the Acknowledgement of Trust after you acquire the asset permit a minor under 18 to be a beneficiary. Both documents are often used to hold property for minors.

• But speak with your accountant about land tax.
• Also, speak to your accountant about a minor paying 66% tax on unearned income. This is under Division 6AA. (If your child is disabled, consider a Special Disability Trust instead.) This is because it is the minor who pays income tax and Capital Gains Tax on the asset. This applies whether they are under or over 18 years of age.
• And do not forget, when the child turns 18, they can direct the trustee to transfer the asset to themselves. (This is generally for no CGT or transfer (stamp) duty.)
• Asset protection is not excellent: the younger the person, the greater the risk they will go bankrupt, get divorced, or stop loving you. Or, to put it another way, you are more likely to go bankrupt or divorce when compared to your parents. I am not sure why this is the case. Some say you get smarter as you get older. Or it could be because you get tired!

Can the trustee of these bare trusts borrow money to purchase the property?

Yes, both the Legal Consolidated Declaration of Trust before you buy and the Acknowledgement of Trust after you acquire the asset allow the gearing of the asset. This is at any time. For example, you could borrow to buy the property. Or in 20 years, you can use the property in the bare trust as security for a loan. The beneficiary will tell the bare trustee what to do. The bare trustee is a servant of the beneficiary. The bare trustee must act on the beneficiary’s instructions.

Banks demand specific powers (e.g., ‘to mortgage’). Our Confirmation Deed includes these specific powers to satisfy lenders. This is without crossing the line from a bare trust into a full trust.

Can the Trustee in the bare trust be given more powers?

The deed you are building contains a list of specific powers for the Trustee.

Unlike a Company Power of Attorney, where you include as many powers as possible to cover many scenarios, the powers in this Acknowledgement of Trust are deliberately not so wide.

Regulators must not be allowed to interpret overly broad powers as granting the Bare Trustee additional rights or an equitable interest in the Trust Asset. Australian courts affirm that the duties of a bare trustee are simply to hold the property and deal with it as the beneficiary directs. Granting powers beyond this administrative scope creates ambiguity and risk the arrangement being interpreted as a more complex trust, which has adverse tax or transfer duty consequences.

Free legal advice when building an Acknowledgement of Trust

Please telephone us if you need more legal advice in answering the questions. But start the free building process first. It answers most questions.