The State Revenue Legislation Further Amendment Act 2020 (NSW) was implemented in June this year, and is relevant to trustees of discretionary trusts that own residential land in New South Wales.
The Act amends the NSW Duties Act 1997, the Land Tax Act 1956 and the Land Tax Management Act 1956, and mandates that the trustee of a discretionary trust will be deemed a foreign person unless its trust deed expressly provides that:
- no potential beneficiary of the trust is a foreign person; and
- the terms of the trust cannot be altered to allow a foreign person to become a potential beneficiary in the future.
The amendments oblige ‘foreign persons’ who own or purchase NSW residential land to pay additional land tax and additional duty. ‘Foreign persons’ include individuals not ‘ordinarily resident in Australia,’ corporations and trustees in which an individual is ‘not ordinarily resident in Australia, foreign governments and other persons prescribed by the applicable regulations. However, Australian citizens will not be deemed foreign persons.