In 2019, the NSW Government enacted changes to duty and land tax laws in NSW being the State Revenue Legislation Further Amendment Act 2020 (NSW) (the Act). The Act had significant implications for discretionary trusts. In particular, the changes resulted in an assumption being applied that the trustee of a discretionary trusts is a foreign person and therefore any real property that is owned by the trust is subject to the additional surcharge on duty and land tax.
The Act allowed time for trustees to irrevocably amend their trust deeds to ensure that the deed provided that a foreign person was prevented from being or becoming a beneficiary of the Trust.
This was to be completed by 31 December 2020.
The Australian Tax Office is now conducting audits of discretionary trusts. Any discretionary trust that had not amended its trust deed by the deadline in the Act will now be deemed to be foreign and therefore liable for the additional surcharge on duty and land tax, in addition to fines for the non payment of the surcharge which, under the Act, is backdated to 2016.
If you have not updated your Discretionary Trust Deed, you should do so urgently.
Our office can assist you with this if you are unclear on the process required to update the Discretionary Trust Deed. Please contact us on 9525-8688 or by email on email@example.com if you require further information or assistance.