Newsroom

    Trust Deeds holding residential land in NSW must be amended by 31 December 2020

    Author //

    The Duties Act 1997 and the Land Tax Management Act 1956 have been recently amended to state that discretionary 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.

    Generally, a 'foreign person' who owns residential land in NSW pays:

    • Duty surcharge of 8% on the dutiable value of land; and
    • Land Tax surcharge of 2% of the land tax value of residential land owned as at 31 December each year.

    Trustees of discretionary trusts that own residential land in NSW must amend their trust deeds to exclude foreign persons as beneficiaries by 31 December 2020 in order to avoid foreign Land Tax and Duty surcharges. Importantly, the changes also allow trustees to be refunded foreign surcharges, provided the trust terms are amended by the prescribed due date.

    Where residential land is held by a trust (whether a discretionary or a unit trust) whose beneficiary is a discretionary trust without a foreign person exclusion clause in the deed, the land holding trust may be considered a foreign trust. Therefore, it is important to assess whether both the land holding trust deed and the beneficiary trust deed need to be amended to prevent foreign surcharges from applying.

    Trustees of trusts holding, or planning to purchase, residential land in NSW should look to:

    • Review and amend the trust deed to ensure the trust is not a ‘foreign trust’ by 31 December 2020;
    • Consider whether any beneficiary of the land holding trust is a discretionary trust which also requires its trust deed to be amended; and
    • Where applicable seek a refund from Revenue NSW if they have paid any foreign surcharges in previous years.

    If you require further information, please contact John Gray on 02 8235 1205.

    ClarkeKann is a commercial law firm in Sydney. Our expertise covers commercial & corporate transactions, financial services, litigation, risk management and insolvency, property transactions and resources projects, across a range of industries. For a full list of our legal services, please visit our website at www.clarkekann.com.au. To update your contact details or unsubscribe to any of our publications, email us at ck@clarkekann.com.au
     
    This bulletin is produced as general information in summary for clients and subscribers and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. ClarkeKann asserts copyright over the contents of this document. This bulletin is produced by ClarkeKann. It is intended to provide general information in summary form on legal topics, current at the time of publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters. Liability limited by a scheme approved under professional standards legislation. Privacy Policy
    < Back to Articles

People

Our greatest asset is our talented and committed people – they enjoy what they do and value the opportunity to work together and with our clients. Our people are from diverse backgrounds and approach their work with intellectual rigour and enthusiasm.


 

Expertise

ClarkeKann has received the Australia-Taiwan Business Excellence Award for our efforts promoting and advising on most of the major investments from Taiwan into Australia over the last 20 years. Click below for more details about Foreign Investment. VIEW MORE

Subscribe

Click below to subscribe to our publications and to receive the latest newsVIEW MORE