Many states now have foreign land tax surcharges that apply to foreign persons including trustee of foreign trusts. As a result many trustees will consider amending their trust deeds to ensure that they don’t inadvertently trigger such surcharges. But what if the trust deed of the trust does not permit such changes to be made?

In Re Dion Investments Pty Ltd [2020] NSWSC 1661, the NSW Supreme Court held that the appliable trust deed did not give the trustee power to disclaim or surrender the power to appoint income and/or capital to a foreign beneficiary of the Trust Estate.

However, under its powers under the Trustee Act the Court granted the trustee the necessary power to release any trusts and powers referable to the trust estate that may benefit a foreign person.

This decision highlights the need to review a trust’s trust deed before seeking to amend the deed to remove foreign beneficiaries and amending the deed in accordance with those provisions. Failure to do so could result in a defective variation and the triggering of the land tax surcharge.  In addition, the case shows that, in some circumstances, the only remedy will be to seek a declaration from the Supreme Court to affect the necessary amendment.

To discuss further or for more information:

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

Laura Spencer
Senior Associate
M +61 436 436 718 | T +61 3 9611 0110
E lspencer@sladen.com.au

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

Lucy Liang
Graduate Lawyer
E lliang@sladen.com.au