A Bill dealing with an important aspect of the foreign person surcharge regime is presently before the NSW Parliament.  If that Bill is passed, your trust deed may need to be amended before 31 December 2019.

What are foreign person surcharges  

You may be aware that, from 21 June 2016, a foreign person who holds or purchases residential land in NSW will have to pay an additional 2% land tax surcharge and/or an additional 8% purchaser (stamp) duty surcharge.  Importantly, the trustee of a discretionary (family) trust will generally be classified as a foreign trustee, and thus liable to pay surcharge duty and land tax on any residential land in NSW owned or purchased by the trust,  if any potential beneficiary of that trust is a foreign person.

What is the proposed change?

The change to the legislative regime may impact the exemption presently available to a trustee who is inadvertently caught under the regime.

At present, NSW Revenue has the discretion to exempt a trustee who has inadvertently attracted liability for surcharge duty or land tax provided the trustee amends the trust deed to exclude foreign beneficiaries within 6 months of the exemption being granted.

However, under the new State Revenue Legislation Further Amendment Bill 2019, the trustee may no longer be exempt from liability unless the terms of the trust have been amended by 31 December 2019.

What does this mean for you? 

If the NSW Parliament assents the Bill, it may mean that if:

  • the trustee of your trust holds or seeks to purchase residential land in NSW; and
  • the trust deed is not amended by 31 December 2019 to prevent a foreign person from being a beneficiary;

your trust may be liable to pay surcharge duty or land tax and may no longer be able to apply to NSW Revenue for the exemption from liability that is presently available.

It is worth noting that as of the date of this email, the Bill has not passed NSW Parliament and so does not have full legal force.   There is a possibility that the Bill may not receive parliamentary assent at all, or that this part of the legislation may be amended prior to it receiving parliamentary assent.  It is also possible that if the Bill is not passed until the New Year, that the 31 December deadline will be extended.

However, as the cut-off date proposed under the Bill of 31 December 2019 is little more than a month away, we strongly recommend that you contact your advisor or us as soon as possible if you have a family trust that holds residential land in NSW or may be used to purchase residential land in NSW in the future.   We will be able to take you through your available options and advise you on what steps you can take to avoid inadvertently attracting liability under the regime.


For further information please contact:

This article is for general information purposes only and does not constitute legal or professional advice.  It should not be used as a substitute for legal advice relating to your particular circumstances.  Please also note that the law may have changed since the date of this article.