New South Wales land held and purchased by a ‘foreign person’ is subject to the surcharge duties being the surcharge purchaser duty and surcharge land tax. A ‘foreign person’ includes individuals, corporations and trusts who are foreign.

The State Revenue Legislation Further Amendment Act 2020 clarifies the liability of foreign trustees of a discretionary trust to the surcharge purchaser duty and land tax. It provides that a trustee of a discretionary trust if not considered to be a foreign trustee to the extent that both of the following requirements are satisfied:

  • No potential beneficiary of the trust is a foreign person; and
  • The terms of the trust are not capable of amendment in a manner that would result in there being a potential beneficiary of the trust who is a foreign person.

The Act also includes transitional provisions to allow for trust deed amendments for the above requirements; with the government having extended the time for trusts to exclude foreign beneficiaries, helping them to avoid NSW land tax and duty surcharges. Trust deeds must now be amended by 31 December 2020.

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