Author
Kylee Smith
Category
Alerts

Owners of discretionary trusts that hold NSW Land must act before 31 December 2020 to potentially avoid surcharges.

On 24 June 2020, the State Revenue Legislation Further Amendment Act 2020 (NSW) received Royal Assent. Broadly, this legislation sets out that a trustee of a discretionary trust owning residential property in NSW is taken to be a foreign person for the purposes of foreign surcharges.

Surcharges apply if you do not act before 31 December 2020

Depending on your circumstances, failure to amend the discretionary trust deed could result in up to an 8% surcharge duty imposed on NSW land purchases (for transactions from 21 June 2016) and an annual land tax surcharge of up to 2%, payable on any residential land in NSW acquired or owned by the trust since 2016.

Refund

If you have already paid the surcharge tax in prior years, you may be eligible for a refund if you amend your trust deed appropriately by the 31 December 2020 deadline.

Surcharge exemption

However, the discretionary trust will be exempt from surcharge purchaser duty or surcharge land tax if the trust deed is amended by midnight on 31 December 2020 to:

  • permanently exclude foreign persons from being beneficiaries, and
  • the terms of the trust deed are amended to make the exclusion irrevocable.

Learn more

If you believe the above changes impact you, please contact Josh Meggs, Kylee Smith or your Pilot Advisor as soon as possible and before 31 December 2020* to review your trust deed to ascertain if amendments are required.

*Please note our office will close on 23 December 2020 and re-open on Monday 11 January 2021.