The NSW Government is introducing changes to the Duty Act 1997 NSW and the Land Tax Act 1956 NSW. These changes will affect property owners especially those who have utilised Discretionary Trusts and new Testamentary Trusts.
Discretionary Trusts
Trustees of Discretionary Trusts will be treated as foreign persons unless the Trust Deed irrevocably excludes foreign persons as potential beneficiaries even if there are no actual foreign persons who are beneficiaries.
If the terms of the Discretionary Trust, which have acquired residential land have not been amended to irrevocably exclude foreign beneficiaries before Midnight 31 December 2020 the Trustee of the discretionary Trust will be liable for:
· Surcharge duty on the Transfers of dutiable property that have occurred or occur prior to 31 December 2020; and
· Surcharge land tax in respect of the 2017, 2018, 2019 and/or 2020 land tax years.
Testamentary Trusts
Trustees of a Testamentary Discretionary Trusts which do not prevent a foreign person from being beneficiary of the Trust will be treated as foreign persons for surcharge duty and land tax purposes if the Will is executed after 31 December 2020.
Therefore, if you have been appointed as a Trustee of a Discretionary Trust purchasing or holding residential land please contact us so we can amend the Trust Deed to exclude foreign beneficiaries.
We're here to help in Bathurst, Oberon and Lithgow on 1800 650 656.
Peter McManus | Solicitor