You or your clients (if you are an accountant) may have received letters from Revenue NSW (or other State and Territory agencies) notifying you about the impact of surcharge land tax to be paid by foreign persons who own land. In NSW, this currently only applies to residential land (as defined).

Discretionary Trust: Overview of the situation in NSW

Discretionary Trust Circumstance

Action

Does it own residential property in NSW Is it purchasing NSW residential property in 2020 Foreign Persons Variations
Yes Does not matter whether intending to purchase or not Trust Deed amended prior to 24 June 2020 The Trustee should promptly apply for a refund of surcharge purchaser duty (if paid) and a refund of surcharge land tax (if paid)
Yes Does not matter whether intending to purchase or not Trust Deed amended between 24 June 2020 and 31 December 2020 The Trustee should promptly apply for a refund of surcharge purchaser duty (if paid) and a refund of surcharge land tax (if paid)
Yes No Not yet amended The Trust Deed should be amended to irrevocably exclude Foreign Persons by 31 December 2020 to avoid 2021 land tax surcharge, but be aware the exclusion is irrevocable so consider if that is an issue
No Yes Not yet amended The Trust Deed should be amended to irrevocably exclude Foreign Persons before the contract exchange date, but be aware the exclusion is irrevocable so consider if that is an issue
No No Not yet amended Unless the Trustee of the Discretionary Trust has an indirect interest (as shareholder/unitholder in company / unit trust holding NSW residential land), relax – but check the position for other states and territories if land held / to be bought there.

NOTE 1: In NSW for Testamentary trusts arising before 31 December 2020, the testamentary trusts do not have to irrevocably exclude Foreign Persons.

NOTE 2: With some differences there are similar laws in many Australian states and territories

NOTE 3: There may also be an issue where the trustee for a discretionary trust holds an indirect interest in land such as via a unit trust or company

Carroll & O'Dea Lawyers' Solution for Discretionary Trusts

To help meet the deadline, Carroll & O'Dea Business has developed an online request platform for trust deeds that meet the conditions to create customised trust deed variations for a fixed price.

Give us a call if you have any questions about the Foreign Persons Trust variations, or if you would like to use our online request platform.

Access Here: https://app.checkbox.ai/pubt/81f9464d-cf8e-4be2-9ba4-6da1d4bab8c9

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.