If your trust owns or is purchasing residential property, it may be liable for a NSW land tax surcharge of 0.75% for the 2017 land tax year and 2% from the 2018 land tax year even if you are not a ‘foreign person’. Further, the tax-free threshold will not apply. Al discretionary trusts and many unit trusts will be taken to be owned by ‘a foreign person’ unless the trust deed excludes all beneficiaries who are ‘foreign persons’.
A ‘foreign person’ can be:
- An individual, who is not an Australian citizen or is not ordinarily resident in Australia;
- A company;
- A trustee of a trust;
- A beneficiary of a land tax fixed trust;
- A partner in a limited partnership.
It is therefore essential for all trust deeds, which own, or are likely to own residential property, to be reviewed and possibly amended, to avoid the surcharge.
Revenue NSW is taking the view that ALL discretionary trusts are liable for increased duty unless an exemption is granted.
If you would like assistance to ensure that your trust deeds meet the latest compliance requirements then please contact & Legal.