Australia: Foreign trusts - NSW surcharge land tax and surcharge purchaser duty


  • Trustees of discretionary or hybrid trusts which have purchased or held New South Wales residential land from 21 June 2016.


  • A standard discretionary or hybrid trust is likely to be classed as a 'foreign trust' and subject to these surcharges.
  • The NSW Office of State Revenue (OSR) may now grant a retrospective exemption from these surcharges if the trust deed is amended within six months of the grant of the exemption.


Have the terms of your trust deed reviewed to determine if it is a foreign trust – if it is, then consider varying the terms of the trust and seek this exemption if needed.

New South Wales (NSW) imposes a 0.75% surcharge land tax and 4% additional duty on foreign persons who buy or hold NSW residential land. These surcharges apply on top of the normal land tax and duty that may be payable and can materially increase the cost of property in NSW for a foreign person compared to an Australian, as follows.

Rates of NSW duty and land tax Australian Foreigner
Duty 5.5% 9.5%
Land tax 1.6% 2.35%

Standard discretionary or hybrid trusts would more likely than not be classed as foreign persons for surcharge purposes. This is because the NSW duty and land tax legislation adopts the definition of a 'foreign person' from the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) with two small modifications for Australian and New Zealand citizens.

Under FATA, a discretionary beneficiary of a trust is generally treated as having a 100% interest in the trust – meaning that any foreign person who is a discretionary beneficiary of a trust will be treated as having a significant interest in the trust, and the trust itself will be considered to be a foreign person. Given that Australia is a nation of immigrants and most standard discretionary and hybrid trusts have a broad beneficiary class which would include foreign beneficiaries, such trusts would likely be a 'foreign person' under this definition and potentially liable for these surcharges. One foreign relative beneficiary is enough to cause a discretionary trust to be foreign.

The broad reach of the FATA 'foreign person' definition is counterintuitive, particularly where a family trust has always been set up to benefit only Australian beneficiaries and the inclusion of potential foreign beneficiaries arises inadvertently due to wide drafting rather than intent. Many trustees of discretionary trusts established ostensibly for Australian beneficiaries may not have been aware of this result and as a consequence may already be exposed to outstanding surcharge liabilities on their NSW residential land holdings. Trusts which may be affected are those which have acquired or held NSW residential property since 21 June 2016 when these surcharges commenced.

Perhaps recognising this lack of awareness in the community and the unfairness of surcharges applying to trusts that really only benefit Australians, the NSW Minister for Finance, Services and Property has approved an administrative concession to exempt such 'Australian' trusts from these surcharges. This administrative concession will be enacted into law with retrospective effect from 21 June 2016. In the interim period, the NSW OSR has issued Revenue Ruling No. G 010 explaining this administrative concession.

Administrative concession

The administrative concession provides the Chief Commissioner of State Revenue with the discretion to exempt a trustee of a discretionary trust from surcharge purchaser duty and/or surcharge land tax if he is satisfied that the trustee is not involved in a scheme or arrangement for the evasion or avoidance of these taxes. A condition of the grant of this exemption is that the trust deed for the trust must be amended within six months of the grant of the exemption, so that the trust is no longer considered a 'foreign person' for surcharge purposes. A failure to amend the trust deed within six months will result in the exemption being retrospectively rescinded.

The benefit of this administrative concession is that it can operate retrospectively to exempt trustees who may already be exposed to surcharges. For instance, a trustee who has already unwittingly bought NSW residential land under the terms of a standard discretionary trust since 21 June 2016 may apply for this exemption to avoid surcharge purchaser duty. Similarly, a trustee of a standard discretionary trust that held NSW residential land at 31 December 2016 but failed to amend their trust deed in time to avoid surcharge land tax could apply for this exemption to resolve this issue.

We can assist in making these exemption applications for affected discretionary and hybrid trusts and also in drafting the required amendments for the exemption to apply. You should be aware that the trust deed amendment required to achieve the required result is not as simple as merely deleting foreign resident beneficiaries. This is because the FATA definition of a 'foreign person' has complex aggregation and tracing rules. It should also be noted that changes to the beneficiaries of a discretionary trust could also trigger duty and tax consequences, so these should be considered before undertaking any such changes.

To many people's minds the trust deed of a discretionary or hybrid trust is a private document which is not publicly available. We would discourage readers from adopting the view that the OSR will not be able to find out whether a discretionary trust is a foreign person because it either does not have access to the trust deed or know if a beneficiary is foreign. The OSR is actively investigating compliance with these surcharges as part of its 2016–2017 Compliance Program.

The 'Purchaser/Transferee Declaration' form which every purchaser of NSW land must complete as part of their stamp duty assessment has questions which specifically require a purchaser to indicate whether they are a discretionary trust and whether they are a 'foreign person' for surcharge purposes. We understand the OSR is auditing these forms in situations where it has other information relating to the nationality of the purchaser. Besides the information provided on these forms the OSR may exchange information with the Australian Taxation Office (which now also administers the Foreign Investment Review Board functions as they relate to residential land). Income tax records indicating the existence of foreign beneficiaries to a trust are another possible way of identifying a foreign trust.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.