Revenue NSW (formerly the Office of State Revenue – NSW) has started to issue land tax assessments that now include the additional 2% foreign person surcharge land tax amount to trustees
Revenue NSW now deems that a discretionary trust is a foreign trust because of the State Revenue Legislation Further Amendment Bill 2020 (Bill). In order to avoid being treated as foreign trust, the trust deed needs to irrevocably exclude any current or future foreign persons from being a beneficiary under that trust.
Transitional relief exists for trustees to amend and update the deeds before midnight 31 December 2020 to exclude foreign persons from being trust beneficiaries.
While the Bill specifically mentions discretionary trusts being caught by these changes, it may also impact other types of trust structures (e.g. testamentary trusts).
What Action is required
Trustees should review any discretionary trust deeds where residential land is held in NSW, to ensure they are not caught by the changes introduced in the Bill. Please do so before midnight on 31 December 2020.
Rockwell Bates are highly experienced in assisting clients in understanding their land tax obligations as well as reviewing and amending trust deeds.