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Urgent Action Needed if your Discretionary Trust Owns a Property in NSW

If you own real property in New South Wales through a discretionary or hybrid trust, you may need to amend your trust deed before 31 December 2018.


Transfer duty and land tax surcharges are imposed on ‘foreign persons’ that purchase and own residential land in New South Wales. The surcharge rates are currently 8% and 2% and are in addition to duty and land tax payable by non-foreign persons.

Where the land is owned through a discretionary trust, the trustee is considered to be a ‘foreign person’ if any of the trust beneficiaries (whether named or not) do not ordinarily reside in Australia.

When the surcharges were first introduced, many trust deeds were amended to specifically exclude any potential foreign beneficiaries. By excluding the foreign beneficiaries under the trust deed, trustees were able to avoid the transfer duty and land tax surcharges.


On 19 September 2017, Revenue NSW published guidance which provided that the transfer duty and land tax surcharges could only be avoided by a trustee if the amendment to the trust deed to exclude foreign beneficiaries was irrevocable.

As the legislation does not provide that the variation had to be irrevocable, many trust deed amendments prepared before 19 September 2017 were not prepared to irrevocably exclude foreign persons as beneficiaries.

Revenue NSW has provided an amnesty period to 31 December 2018, permitting trustees to make further amendments to their trust deeds so that the exclusion of foreign persons is irrevocable.


If you have previously amended your trust deed to exclude foreign beneficiaries of your discretionary or hybrid trust, it is important that you review the amendment to determine whether the exclusion of the foreign beneficiaries was irrevocable.

If the amendment was not irrevocable, you should engage a lawyer to review and/or further amend your trust deed in order to avoid any future transfer duty and land tax surcharges.

For more information about the changes or for an introduction to a legal professional who can assist with reviewing and amending your trust deed please contact your usual Hanrick Curran advisor. Alternatively contact Jamie Towers, Nathanael Lee, Tim Taylor or Simone Gordon on 07 3218 3900.


Thank you to McInnes Wilson for the article content.

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

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Jamie Towers