This reminder note is relevant to you if you own an interest in residential land in NSW via a discretionary trust. You should contact your accountant to check whether your trust deed needs to be amended by 31 December 2020 to ensure you do not incur unnecessary surcharge land tax and surcharge purchaser duty (together, the foreign surcharges). 


When a foreign person acquires an interest in residential land in NSW, Revenue NSW requires that person to pay the foreign surcharges in addition to the standard taxes levied.

Revenue NSW can also apply these foreign surcharges when the land is owned, directly or indirectly by, or held through a discretionary trust, even if the beneficiaries under the trust are not foreign. The rationale is that the potential beneficiaries of the trust are not limited to the individuals named in the trust deed. They can change, and foreign persons could become beneficiaries of the trust. Therefore, Revenue NSW deems the trustee of a discretionary trust to be a foreign person unless the trust deed expressly includes the provisions referred to below.

These new rules and the amendments referred to below also apply to certain testamentary trusts (being a trust set up in your will as part of your estate plan) signed after 31 December 2020.

What to do

To ensure that Revenue NSW does not impose the foreign surcharges, the trust deed must include, or be amended to include:

  • a provision explicitly stating that no beneficiary of the trust can be a foreign person
  • a further clause stating that the above provision of the trust deed is irrevocable.

If your trust deed does not include the above provisions, then:

  • to be exempt from the foreign surcharges, you must arrange for it to be amended and have a copy of the amended version sent to Revenue NSW by 31 December 2020; or
  • if you do nothing and the trustee of the trust purchases and/or owns residential land in NSW, then the trustee will be liable to pay the foreign surcharges.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.