This newsletter is relevant to any 'foreign person' who owns a residential property in New South Wales. The definition of 'foreign person' includes an Australian Discretionary Trust because of its potential ability to distribute benefits to a 'foreign person'.
You might have heard in the media recently that NSW imposes foreign person surcharge on property ownership, if the property is owned by a 'foreign person'. This penalty surcharge could apply not only to direct ownership by a 'foreign person' but also to properties held by an Australian discretionary trust (possibly a family trust), or by an Australian company or unit trust which is owned by a discretionary trust.
In New South Wales, the 'foreign person' must pay
|| 8% duty surcharge on the dutiable value of land when they buy land ; and
||2% land tax surcharge of the land tax value of all residential land owned as at 31 December each year
Similar provisions apply in other states as well.
The above outcomes can be overcome by amending trust deeds for the discretionary trust to exclude foreign persons from benefiting from the trust. However, if you choose to go down this path, amendments should be made before 31 December 2020 to prevent land tax surcharge being imposed for the year 2021 land tax year.
We are currently reviewing property ownership structures held by your company and trusts and will be in touch with you should you require a deed amendment.
IMPORTANT. If your company or trust owns property in any state in Australia, please contact our office urgently, so we can assess if there is a need for a deed amendment.
For more details please refer to a brief yet succinct article here .
Content and article link courtesy : Mathew McGee and Andrew Noolan of Brown Wright Stein Lawyers.