Changes to Laws relating to Discretionary Trusts

Some changes to legislation that may affect you

The State Revenue Legislation Further Amendment Act (NSW) 2020 (Revenue Amendment Act) has been passed by Parliament and is now law.
The Revenue Amendment Act, amongst other things, provides that a trustee of a discretionary trust is considered a foreign trustee unless the trust deed prevents a foreign person from being a beneficiary of the trust.
Foreign trustees are liable for surcharge transfer duty and surcharge land tax in relation to residential land.
If a discretionary trust prevents a foreign person from being a beneficiary of the trust then the trustee of the trust is not (in that capacity) a foreign trustee and not liable to surcharge transfer duty (stamp duty) and surcharge land tax.
To avoid paying surcharge transfer duty and surcharge land tax, the trust deed must be varied as detailed above no later than 31 December 2020.
We understand that in some circumstances the intended beneficiaries of a discretionary trust will be foreign persons and therefore the amendments proposed above will not be suitable. If this is the case, it is likely that payment of surcharge transfer duty and the surcharge land tax will be unavoidable.

Please contact either Rebecca Young on (02) 9777 8107 or me if you require any assistance in determining whether your trust deed is captured by this legislation, if you wish to vary your trust deed or if you require more detailed advice on this or any other matter.

Rebecca Young John Graves
Senior Associate Principal
Bradfield & Scott Lawyers Bradfield & Scott Lawyers
Telephone: 9233 7299 Telephone: 9233 7299
Email: ryoung @bradscott.com.au Email: jgraves@bradscott.com.au