As referred to in our previous articles, the State Revenue Legislation Further Amendment Bill 2020 (NSW) has now received royal assent on 24 June 2020.

Trustees of discretionary trusts that own residential land in NSW must amend their trust deeds to exclude foreign persons as beneficiaries before midnight on 31 December 2020 to avoid foreign land tax and duty surcharges. In NSW, annual land tax surcharge (currently 2%) is levied on residential land owned by a foreign trustee. In addition, a land transfer (stamp) duty surcharge (currently 8%) applies if the buyer of residential property is a foreign trustee.

The Amendment Act has the effect of deeming the trustee of discretionary trust holding NSW residential property to be a ‘foreign trustee’ unless the trust deed specifically, and irrevocably, excludes foreign persons as beneficiaries.

The Act also allows for refunds of foreign surcharges previously triggered by such discretionary trusts provided the trust terms are amended to exclude any foreign persons as beneficiaries before midnight on 31 December 2020.

If you are a trustee of a discretionary trust which holds residential land in NSW or you are planning to purchase residential land in NSW, you should look to:

Review and amend your trust’s deed to ensure you are not a ‘foreign trustee’ by 31 December 2020; and
Where applicable seek a refund from Revenue NSW if you have paid any foreign surcharges in 2017, 2018, 2019 and 2020 land tax years.

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
E lspencer@sladen.com.au

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