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PRODUCT INFORMATION

TOPDOCS' FOREIGN PERSON EXCLUSION

Topdocs’ Foreign Person Exclusion documentation amends a discretionary or hybrid trust deed to specifically exclude foreign persons from the class of beneficiaries of the trust to avoid the trust having to pay the following surcharges:

  • New South Wales – Surcharge Land Tax
  • New South Wales – Surcharge Purchaser Duty
  • Victoria – Foreign Person Additional Duty
  • Tasmania – Foreign Investor Duty Surcharge

Our documentation is signed off by our legal team at Topdocs Legal, ensuring the trust will not be resettled and the amendment will be valid and effective and in line with the current terms of the trust deed of the trust.

Our Foreign Person Exclusion documentation specifically excludes foreign persons as beneficiaries of a discretionary trust or hybrid trust with reference to the following acts:

  • Foreign Acquisitions and Takeovers Act 1975 (Cth);
  • Duties Act 1997 (NSW);
  • Land Tax Act 1956 (NSW);
  • Duties Act 2000 (VIC); and
  • Duties Act 2001 (Tas).
download Review the Foreign Person Exclusion order checklist for Discretionary Trusts download See the list of documents you will receive
download Review the Foreign Person Exclusion order checklist for Hybrid Trusts download See the list of documents you will receive

WHAT ARE THE LIMITATIONS OF THIS PRODUCT?

This product is designed to only exclude "foreign persons" as they are defined in the above acts.

WHAT IF A NAMED OR DEFAULT BENEFICIARY OR A CONTROLLER IS A FOREIGN PERSON?

This product is not designed to be used if:

  • any of the named/specified beneficiaries of the trust are foreign persons;
  • any of the beneficiaries who are takers in default are foreign persons; or
  • any of the parties involved in decisions regarding the administration or conduct of the trust (for example, as a director or shareholder of the trustee of the trust or as an appointor of the trust) are foreign persons.

If the trust has a named or default beneficiary or a controller (as discussed above) who is a foreign person, please do not complete this application form but instead contact our office.

WHAT ARE THE SURCHARGES THAT APPLY?

NEW SOUTH WALES
SURCHARGE LAND TAX AND SURCHARGE PURCHASER DUTY

Budget measures introduced in New South Wales effective from 1 January 2017 provide that trusts that have a foreign person#1 that holds a substantial interest in the Trust are presently subject to:

  • a land tax surcharge on NSW residential land#2 held by the Trust; and
  • a surcharge purchaser duty on residential land#2 being acquired in NSW.

The New South Wales Office of State Revenue has advised discretionary trusts are automatically captured for the purposes of these surcharges and therefore, any discretionary trust holding or acquiring residential land#2 in NSW will be liable for these surcharges unless the trust deed for the trust is amended to specifically exclude foreign persons as beneficiaries of the Trust.

VICTORIA
FOREIGN PURCHASER ADDITIONAL DUTY

Similar measures were introduced in Victoria as a result of the 2015 budget where foreign trusts are liable to pay foreign purchaser additional duty on the acquisition of residential property (as defined in the Duties Act 2000 (VIC)) in Victoria.

Where a discretionary trust has a foreign personforeign corporation or the trustee of another foreign trust#3 as a potential beneficiary, the trust will be determined to be a foreign trust for the purposes of this surcharge and liable for the additional stamp duty.

To avoid paying the surcharge, trustees can amend the trust deed to specifically exclude the above as beneficiaries.

TASMANIA
FOREIGN INVESTOR DUTY SURCHARGE

The Foreign Investor Duty Surcharge under the Duties Act 2001 (Tas) stipulates that trusts in which a foreign person#4 holds a substantial interest in the trust estate are presently subject to a foreign investor duty surcharge when acquiring residential property#5 and primary production property#6 in Tasmania

Effective from 1 July 2018, any discretionary trust that has any potential foreign persons#4 as beneficiaries will be a foreign trust for the purposes of the foreign investor duty surcharge. Therefore, any discretionary trust acquiring residential property#5 and primary production property#6 in Tasmania will be liable for the foreign investor duty surcharge unless there is evidence to satisfy that the trust has no potential foreign beneficiaries.

SURCHARGE RATES

Discretionary trusts that hold residential land (as defined below) in New South Wales are subject to the following land tax surcharge:

State Applicable dates Additional Land Tax* *Property/Transaction to which Duty Applies
NSW 2017 land tax year 0.75% "residential land" as defined in the
Land Tax Act 1956 (NSW)
2018 land tax year onwards 2%

*land tax surcharge payable is in addition to any land tax otherwise payable

If a discretionary trust acquires residential land in New South Wales or a foreign trust acquires residential property (as defined below) in Victoria, or residential or primary production property (as defined below) in Tasmania, the following additional stamp duty will be applicable to the transaction:

State Date of Contract Additional Stamp Duty* Property/Transaction to which Duty Applies
Victoria on or after 1 July 2016 7% "residential property" as defined in the Duties Act 2000 (VIC)
New South Wales on or after 1 July 2017 8% "residential land" as defined in the Duties Act 1997 (NSW)
Tasmania 1 July 2018 to 1 January 2020

3% (residential)

0.5% (primary production)

“residential property” as defined in the Duties Act 2001 (Tas)

“primary production property” as defined in the Duties Act 2001 (Tas)
  1 January 2020 onwards

7% (residential)

1.5% (primary production)

“residential property” as defined in the Duties Act 2001 (Tas)

“primary production property” as defined in the Duties Act 2001 (Tas)

*additional duty payable is in addition to any stamp duty otherwise payable

References:

#1foreign person in this context refers to the following definitions:

• a "foreign person" as defined in the Duties Act 1997 (NSW); and
• a "foreign person" as defined in the Land Tax Act 1956 (NSW).

#2residential land in this context refers to the following:

• "residential land" as defined in the Duties Act 1997 (NSW);
• "residential land" as defined in the Land Tax Act 1956 (NSW); and

#3foreign person in this context refers to the definition of “foreign natural person” as defined in the Duties Act 2000 (VIC)
foreign corporation in this context refers to the definition of “foreign corporation” as defined in the Duties Act 2000 (VIC)
foreign trust in this context refers to the definition of “foreign trust” as defined in the Duties Act 2000 (VIC)

#4foreign person in this context refers to “foreign natural person” (other than as a trustee acting in its capacity as trustee), a “foreign corporation” (other than as a trustee acting in its capacity as trustee) and a “foreign trustee” acting in its capacity as trustee of a “foreign trust” as defined in the Duties Act 2001 (Tas)

#5residential property in this context refers to the definition of “residential property” in the Duties Act 2001 (Tas)

#6primary production property in this context refers to the definition of“primary production property” in the Duties Act 2001 (Tas)

MORE INFORMATION

Should you have any queries or require more information, please call the team at Topdocs on 1300 659 242.

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Should you have any queries or require more information, please call the team at Topdocs on 1300 659 242.