The 2016 NSW Budget introduced a land tax surcharge which needed to be paid to anyone who owns residential property in Australia but resided overseas.
The State Revenue Legislation Further Amendment Act 2020 (The Act) that received assent on 24 June 2020 has extended this to include discretionary trusts (sometimes known as “family trusts”).
The Act amends the Land Tax Act 1956 and the Land Tax Management Act 1956 to clarify that a trustee of a discretionary trust is foreign if the terms of the trust do not prevent a foreign person from being a beneficiary of the trust.
This means, to avoid any surcharge liabilities, existing trust deeds will need to be amended to include provisions that irrevocably exclude current, or future foreign beneficiaries from receiving trust distributions.
Transitional provisions allowing amendments to be made to exclude foreign beneficiaries are now in place and must be made and executed before 31 December 2020.
If The Act (2020) affects you, the NSW government has outlined the following steps to complete by 31 December to avoid any penalties:
- Read the Commissioner’s Practice Note 004 v2 to ensure that your trust deed meets the requirements, available here: https://www.revenue.nsw.gov.au/help-centre/resources-library/foreign-surcharges-and-discretionary-trusts.
- Go to the land tax online services at: https://www.revenue.nsw.gov.au/help-centre/online-services/land-tax-online.
- Log in with your Land Tax Client ID and Correspondence ID.
- Complete the declaration and upload a copy of your complying trust deed.
We are here to help. If you need any further information, assistance with amending your trust deed or lodging the documents with the NSW government, give us a call before 30 November on (07) 3209 2300 or send us an email at firstname.lastname@example.org.