Testamentary Discretionary Trusts – NSW Surcharge Purchaser Duty and Surcharge Land Tax

Articles Written by Richard Gelski (Consultant), Gina Joseph (Associate)

Breaking news

NSW lifts extra charges to stamp duty and land tax in respect of testamentary trusts with potential non-resident beneficiaries, provided they are created under Wills or Codicils executed on or before 31 December 2020.

The State Revenue Further Amendment Bill 2020 (NSW) (“the Bill”) is currently awaiting Royal assent.

Under the Bill, the trustee of an “Australian testamentary trust” is not a foreign trustee and will be able to avoid surcharge purchaser duty and surcharge land tax (in respect of the 2017 and subsequent land tax years) even if the trust does not prevent a foreign person from being a beneficiary of the trust if:

  • for a trust arising from a will or codicil – the will or codicil was executed on or before 31 December 2020, or,
  • for a trust arising from the administration of an intestate estate – the deceased died before,  or within two (2) years after the commencement of the relevant section, or,
  • for a trust resulting from an order of a court varying the application of the provisions of a will or codicil or of the rules governing the distribution of an intestate estate – the order was made on or before 31 December 2020, or,
  • for land tax – where the liability for land tax is required to be assessed (under clause 9 of Schedule 1A of the Land Tax Management Act 1956 (NSW)) as if the deceased had not died and had continued to use and occupy the land as his or her principal place of residence.

The Bill defines an ‘Australian testamentary trust’ as a discretionary trust arising from a will or codicil or the administration of an intestate estate (or as a result of an order of a court varying the application of the provisions of a will or codicil or of the rules governing the distribution of an intestate estate) where the deceased was not a foreign person immediately before his or her death.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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