Changes to NSW stamp duty and land tax laws may mean you pay more

Recent amendments to New South Wales (NSW) rules may mean additional stamp duty and land tax where the potential beneficiary of a discretionary trust could be a foreign person.

The laws apply to any acquisition of residential property in NSW on or after 21 June 2016. As of this date:

  • The surcharge purchaser duty is 8% of the market value of the property
  • The surcharge land tax is 2% of the unimproved value of the land for any residential property in NSW.

However, if you act now, these surcharges may be avoided if the discretionary trust deed is amended by 31 December 2020 to:

  • prevent a foreign person from being a beneficiary of the trust (no foreign beneficiary requirement); and
  • provide that the clause preventing a foreign person becoming a beneficiary cannot be amended to allow a foreign person to be a beneficiary later (no amendment requirement).

What you need to do

If you own residential property in NSW through a discretionary trust or have the potential to do so you should act before 31 December 2020 to:

  1. Review the trust deed to determine if an amendment is required;
  2. If needed, amend the trust deed, making sure that it satisfies both the no foreign beneficiary requirement and no amendment requirement; and
  3. If you have already paid surcharge purchaser duty or surcharge land tax on the basis that you are a foreign person, then you should seek a refund from Revenue NSW. 

Undertaking a review of your trust deed and assisting with the required amendments can all be handled by our expert team at Calibre Business Advisory. If you have any questions, do not hesitate to contact us on 0292612177.