DO YOU HAVE A DISCRETIONARY TRUST THAT HOLDS PROPERTY IN NSW? ARE YOU PLANNING ON PURCHASING NSW PROPERTY IN THE FUTURE?
IMPORTANT CHANGES IMPACTING DISCRETIONARY TRUSTS WHICH OWN PROPERTY IN NSW
The NSW State Government has introduced a surcharge land tax for discretionary trusts who own land in NSW and have the ability to distribute to foreign beneficiaries. The surcharge applies from midnight on 31 December of the previous year.
Currently the surcharge rate is:
0.75% from the 2017 land tax year; and
2% from the 2018 land tax year onwards
HOW DOES THIS IMPACT ME?
If your Discretionary trust has the ability to distribute to a foreign beneficiary and owns land in NSW or is looking to own land in NSW in the future, it will be caught by the new surcharge. To avoid the surcharge, a specific clause has to be included into the trust deed excluding the distribution of income to foreign beneficiaries.
WHAT DOES THIS MEAN?
Unless you have advised Revenue NSW and provided the appropriate documentation confirming your foreign status by 31 December 2019, any land holdings in your discretionary trust could be liable for the additional surcharge tax – which may be significant.