As outlined in our previous articles here and here, the State Revenue Further Amendment Bill 2019 (NSW) was introduced to NSW Legislative Assembly on Tuesday 22 October 2019, and proposed to make changes to New South Wales land tax and duty legislation. In particular, under the 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, under an irrevocable clause, a foreign person from being a beneficiary of the discretionary trust.
Importantly, under the proposed changes trustees were given up to 31 December 2019 to amend their trust deeds to ensure that it is not a “foreign trust”. However, as at 31 December 2019, the NSW Government had not passed the legislation.
In a statement released late last year by Revenue NSW it was noted:
As the Bill has yet to be passed by the Parliament, the Government intends to extend this deadline to a later date, in 2020. However, trustees are encouraged to amend their deeds by midnight 31 December 2019, if possible, to avoid incurring a land tax surcharge liability and having to apply for an exemption or refund.
The “intent” of the Government may of course later be changed and does not provide a guarantee for trustees. However, the statement indicates an extended timeframe for discretionary trusts yet to make the required changes.
If you are a trustee of discretionary trust which has NSW residential land and are yet to modify your trust deed in light of the proposed changes, you should look to:
Seek advice from your lawyer to review, and if required, amend your trust’s deed to ensure it is not a “foreign trust”; and
Assuming the legislation passes, if you have formerly paid any foreign surcharges and have amended the trust deed, 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:
Laura Spencer
Senior Associate
T +61 3 9611 0110
lspencer@sladen.com.au
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
