A discretionary trust that holds residential land in NSW can be treated as a “foreign person” for surcharge purposes even if it has never had a foreign beneficiary. A recent NSW Civil and Administrative Tribunal decision shows that amending the trust deed after the relevant date will not undo the resulting liability.
Since 2016, foreign persons buying or holding residential land in NSW have been liable for surcharge purchaser duty and surcharge land tax. A discretionary trust is deemed a foreign person if a foreign person is, or could become, a beneficiary. Amendments in 2020 allowed trustees to avoid this by irrevocably excluding foreign persons from their deeds, but relief for past liabilities required this to be done by 31 December 2020.
In Aroosa Invest Pty Ltd v Chief Commissioner of State Revenue [2026] NSWCATAD 323, a family trust bought an off-the-plan unit at Rockdale in 2016 under a deed permitting distributions to a wide class of beneficiaries. Revenue NSW sent correspondence about the issue in 2020 to an outdated address. The trustee executed a deed of rectification in 2022, purporting to exclude foreign beneficiaries from 2016, and a further variation deed in 2024. It was assessed for surcharge duty and surcharge land tax for 2020 to 2024.
Senior Member Redfern confirmed the assessments. The 2022 deed did not define “foreign person” by reference to the legislation or make the exclusion irrevocable. A deed of rectification may bind its parties but cannot alter the “taxable facts” on which the Chief Commissioner assesses, and the 2024 variation operated only from its date. As liability arose under the legislation rather than from the service of notices, the incorrect address did not affect the assessments, and there was no discretion to extend the 2020 deadline. Despite some sympathy for the trustee, fairness could not affect the validity of the assessments.
Ultimately, the decision illustrates the strict operation of the foreign person deeming provisions and the limited effect of retrospective trust amendments on surcharge liability.
