PRODUCT INFORMATION

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.

• See Revenue Ruling No G 010 Version 2
• What are the surcharges?

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 person, foreign 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 foreign persons as beneficiaries.

• What are the surcharges?

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 these surcharges.

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:

• Duties Act 1997 (NSW);
• Duties Act 2000 (VIC); and
• Land Tax Act 1956 (NSW).

	Review the Foreign Person Exclusion order checklist for Discretionary Trusts		See the list of documents you will receive
	Review the Foreign Person Exclusion order checklist for Hybrid Trusts		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 TAX SURCHARGES THAT APPLY?

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

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

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

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

References:

^#1 foreign 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).

^#2 residential land in this context refers to the following in relation to surcharge purchaser duty and surcharge land tax applicable in New South Wales:

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

^#3 foreign 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)

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.