NSW LAND TAX

UPDATE

December 2020

This update outlines changes to the way in which NSW taxes land held in trusts

From 1 January 2021, all discretionary trusts holding NSW residential land will be classified as ‘foreign’ unless ‘foreigners’ are specifically excluded from benefit from the trust.

A foreign trust will pay an additional 2% land tax surcharge.  There is no threshold.

The surcharge will be applied retrospectively for four years.

This means that a trust which does not exclude ‘foreigners’ will be liable to a 10% surcharge in 2021 and 2% annually thereafter.

A trust deed amended prior to 31 December 2020 to exclude ‘foreigners’ will avoid the surcharge altogether, including the surcharge in respect of the retrospective four years.

A trust deed amended on or after 1 January 2021 will only avoid the surcharge prospectively, it will not avoid the retrospective charge.

Norbury Lawyers can assist you with an appropriate variation which will exclude ‘foreigners’ and eliminate the surcharge.