Life, Death and Taxes – Insights by Andrew Henshaw
NSW Discretionary Trusts: Still time to act to avoid retrospective additional duty and land tax surcharges
On 22 October 2019, the New South Wales (NSW) government introduced legislation (State Revenue Legislation Further Amendment Bill 2019 (NSW) (Proposed Legislation)) which would deem all discretionary trusts to be ‘foreign trusts’, unless the terms of the trust explicitly prevented a foreign person from being, or ever becoming, a beneficiary of the trust. This is referred to as the Foreign Beneficiary Exclusion.
Under the Proposed Legislation, discretionary trusts which did not contain the Foreign Beneficiary Exclusion were given until 31 December 2019 to amend their deeds to include the Foreign Beneficiary Exclusion.
Due to the failure to pass the Proposed Legislation in an a reasonable time, and a last minute ‘legislation by media release’ by Revenue NSW, trustees of discretionary trusts that own residential property in NSW (and who have not already taken action) now have a final window of opportunity to avoid retrospective duty and land tax. It is strongly recommended that affected trustees consider taking immediate action to amend their trust deeds.