As outlined in our previous article, under the proposed changes to New South Wales land tax and duty legislation, a trustee of a discretionary trust (including testamentary trusts) will be deemed to be a “foreign trust” if the terms of the trust do not prevent a foreign person from being a beneficiary of the discretionary trust. Importantly, these changes are proposed to have retrospective effect to the 2017, 2018 and 2019 land tax years and can catch dutiable transactions back to 21 June 2016.

Where such ‘foreign’ discretionary trusts hold residential properties in NSW, trustees of such trusts will potentially be subject significant foreign duty surcharges (currently imposed at a rate of 8% on dutiable value) and annual land tax surcharges (currently imposed at a rate of 2% on land site value).

Under transitional rules in the State Revenue Further Amendment Bill 2019 (NSW) (which at the time of this snippet had not yet been passed) trustees have been given up to 31 December 2019 to amend their trust deeds to ensure that it not a “foreign trust” and that it is not subject to hefty retrospective foreign surcharge liabilities.

If you are a trustee of discretionary trust which has NSW residential land you should look to:

Review and arrange to amend your trust’s deed to ensure it is not a “foreign trust” by 31 December 2019; and
If you have formerly paid any foreign surcharges and have amended the trust deed, you should seek a refund from Revenue NSW.

If you have any questions or would like assistance in reviewing and amending your trust’s deed or seeking a refund of duty previously paid, please contact our specialist team:

Denise Tan
Senior Associate
T +61 3 9611 0160 | M +61 438 714 965
E: dtan@sladen.com.au

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E: pbroderick@sladen.com.au

Laura Spencer
Senior Associate
T +61 3 9611 0110
lspencer@sladen.com.au