If so, 31 December 2019 is an important date for you.

The State Revenue Legislation Further Amendment Bill 2019 was introduced to the NSW Parliament on 22 October 2019. Once law, the effect of the new legislation is to deem a discretionary trust a foreign person for the purposes of Surcharge Land Tax unless its trust deed specifically prevents (or is amended to prevent) foreign persons from being beneficiaries of the trust by 31 December 2019.

In NSW Surcharge Land Tax (currently 2%) is levied on residential land owned by a foreign person in addition to any other land tax it is already liable to pay.

Why are discretionary trusts considered to be foreign persons for land tax purposes? Because every beneficiary that can potentially benefit from the trust is deemed to have the maximum percentage interest in the income or assets of the trust that may potentially be distributed by the trustee to them. This covers all beneficiaries of the trust – not just those beneficiaries who are specifically named. Therefore, if any beneficiary is a foreign person, the trust will be considered foreign for land tax purposes. Depending on the definition of ‘beneficiary’ in your trust deed, this might include a British cousin, a company incorporated in Singapore that your uncle owns shares in or a foreign charity. At present, the NSW Commissioner of State Revenue exempts discretionary trusts from Surcharge Land Tax on a case-by-case basis, provided the trust deed is amended to prevent foreign persons from benefitting within 6 months of the exemption being granted. It is likely this exemption will be removed with the passing of the new Bill into law.

If you do hold residential land in your discretionary trust or have any concerns, please do not hesitate to give us a call to discuss.

Further to the above:

A few clients have asked if this affects Superannuation funds.
To clarify, this only affects Discretionary Trusts, it does not affect Superannuation Funds.

If either of the two applies to your Discretionary Trust, please contact our office :


  • 1. your Discretionary Trust currently holds residential property/land in NSW , or
  • 2. you have already formed a discretionary trust and intend to buy residential property/land into the trust in the future