Discretionary Trusts- Alert

If you have a Discretionary Trust that either currently holds real property or intends to purchase real property in the future, you need to ensure the Trust Deed specifically excludes foreign persons from being a beneficiary under the Trust Deed.

Failure to do so will incur a 2% surcharge on land tax in New South Wales, and an 8% surcharge on property purchased in New South Wales.

Action needs to be taken now as there is only a small window of opportunity to vary the Trust Deed to access the exemptions and refunds of prior surcharge liabilities that are liable on property owned or purchased since 21 June 2016.

This window of opportunity closes on 31 December 2020, so there is very little time to make the necessary amendment to ensure that you are entitled to any refund or exemption for surcharges that have or may be imposed.

Failure to do so, may mean that you will be charged 2% land tax surcharge for the years 2017, 2018, 2019 and 2020 on the unimproved value of any residential property held by the Discretionary Trust.

We can review your Trust Deed and prepare the necessary Deed of Variation required to ensure you are not impacted by this change. Call Drake & Associates on 4332 1055.

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