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Chapters

  1. Overview
  2. Individuals
  3. Partnerships
  4. Corporations
  5. Discretionary Trusts
  6. Other Trusts
  7. Other Exemptions and Concessions
  8. International tax treaties

6. Other Trusts

A trustee’s foreign status is determined by the foreign status of the beneficiaries.

Surcharge Purchaser Duty is payable when a trustee of a trust acquires residential-related property in NSW or declares a trust over residential-related property in NSW, and the trustee is considered a foreign person.

The trustee is considered a foreign person if any unit holder is:

An interest in a trust includes:

  • beneficial interest in the income or property of the trust; or
  • an interest in a unit in a unit trust.

It is important to recognise the type of trust acquiring the residential related property. The Surcharge Purchaser Duty implications differ for each trust type.

Unit trusts

A trustee’s foreign status is determined by the foreign status of the unit holders.

Residential-related property in NSW being acquired by a trustee of a unit trust will be liable for Surcharge Purchaser Duty if the trustee is considered a foreign person.

The trustee is considered a foreign person if any unit holder is:

An interest in a trust includes:

  1. beneficial interest in the income or property of the trust; or,
  2. an interest in a unit in a unit trust.

Helpful information

Purchaser/Transferee Declaration

The trust details must be completed in section 4.1 of the Purchaser/Transferee Declaration when any purchaser/transferee is acting as trustee. This information must also be entered when processing the transaction via Electronic Duties Returns (EDR).

References

Substantial interest

A person holds a substantial interest in a trust if they hold a beneficial interest of at least 20% of the income or property of the trust.

The trustee is taken to be foreign persons if an individual not ordinarily resident of Australia, a foreign corporation or foreign government holds a substantial interest.

Surcharge Purchaser Duty is calculated on the dutiable value of the interest the trust is acquiring.

Example

A
has a 
Substantial Interest 
as they have a beneficial interest of
20% 		B
has a 
Substantial Interest
as they are associated persons
with A and have a combined
beneficial interest over 20%		C
has a 
Substantial Interest
as they have a beneficial interest of
70%

If A, B or C are foreign persons, the trustee is considered a foreign person and liable for Surcharge Purchaser Duty

References

Aggregate substantial interest

Two or more persons (with or without any associate/s) hold an aggregate substantial interest in a trust if they hold beneficial interests in at least 40% of the income or property of the trust.

The trustee is taken to be foreign persons if two or more individuals not ordinarily resident of Australia, a foreign corporation or foreign government holds an aggregate substantial interest.

Surcharge Purchaser Duty is calculated on the dutiable value of the interest the trust is acquiring.

Example

A, B, C & D

have an

Aggregate Substantial Interest

as their beneficial interest is

40%

If A, B, C & D are foreign persons, the trustee is

Liable for Surcharge Purchaser Duty

References

Tracing provisions

A substantial interest or an aggregate substantial interest may exist as a result of holding interests in other corporations or trusts under the tracing provisions in section 19 of the Foreign Acquisitions and Takeovers Act 1975. The tracing process can be applied multiple times through a number of entities.

Example

A is a foreign person who holds a substantial interest in Company B. This makes company B a foreign person.
Company B has a substantial interest in Trust C. The trustee of Trust C is considered a foreign person.

Trust C has a substantial interest in Company D. This makes company D a foreign person.

Company D purchases residential-related property in NSW

Through the tracing provisions, it is determined that each party is a foreign person.

This transaction is liable for Surcharge Purchaser Duty

References

Documentary evidence and record keeping

The Duties Client Identification (CI) and Proof of Status factsheet and evidentiary requirements list the evidence required for all Duties transactions.

When residential-related property is being acquired, evidence confirming proof of status may be required for each liable party (individual, corporation, partnership, or trust).

The method of lodgement determines the initial information required before processing or lodging.

Transactions processed on EDR

To ensure an accurate assessment of Surcharge Purchaser Duty it is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons.

Transactions lodged with Revenue NSW

Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

Transactions selected for Audit

Transactions that have been processed on EDR and selected for audit must provide Duties Client Identification (CI) and Proof of Status documentation along with the evidentiary requirements for that transaction.

References

Other Trusts

Declaration of trust

A declaration of trust over residential-related property is liable to Surcharge Purchaser Duty where any beneficiary is a foreign person.

A beneficiary can be an individual, corporation, trust, or government.

All documents must be lodged with Revenue NSW via eDuties for assessment.

Helpful information

Purchaser/Transferee Declaration

The trust details must be completed in section 4.1 of the Purchaser/Transferee Declaration when any purchaser/transferee is acting as trustee.

References

Superannuation trust

Residential–related property in NSW purchased by a:

  • Trustee on behalf of a superannuation fund, or
  • Bare trust on behalf of a superannuation fund

will not be liable for Surcharge Purchaser duty if the members are Australian citizens or satisfy the ordinarily resident of Australia requirements.

Helpful information

Purchaser/Transferee Declaration

The trust details must be completed in section 4.1 of the Purchaser/Transferee Declaration when any purchaser/transferee is acting as trustee. This information must also be entered when processing the transaction via Electronic Duties Returns (EDR).

References

Charitable trusts

Charitable trusts acquiring residential-related property in NSW are not liable to Surcharge Purchaser Duty if they are granted an exemption under section 275 of the Duties Act 1997.

Where a charitable trust is not eligible for an exemption under section 275 of the Duties Act 1997, the matter must be lodged with Revenue NSW.

All submissions must be lodged via eDuties.

Helpful information

Purchaser/Transferee Declaration

The trust details must be completed in section 4.1 of the Purchaser/Transferee Declaration when any purchaser/transferee is acting as trustee.

Testamentary trust

An Australian testamentary trust is a discretionary trust arising from a will or codicil or the administration of an intestate estate where the deceased was not a foreign person immediately before death.

The trustee of an Australian testamentary trust is not a foreign trustee even if the trust does not prevent a foreign person from being a beneficiary of the trust if:

  1. the will or codicil was executed on or before 31 December 2020, or
  2. the deceased died intestate before, or within two years after 24 June 2020, or
  3. c.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 was made on or before 31 December 2020.

Surcharge Purchaser Duty will apply to testamentary trusts created under Wills or codicils executed on or after 1 January 2021 that acquire residential related property in NSW, unless the trust deed for the testamentary trust meets the following criteria:

  1. No potential beneficiary of the trust is a foreign person (the "no foreign beneficiary requirement")

    AND
  2. The terms of the trust must not be capable of amendment in a manner that would result in a foreign person being a potential beneficiary (the "no amendment requirement")

Helpful Information

Lodgement

All documents must be lodged for assessment by Revenue NSW via eDuties.

Purchaser/Transferee Declaration

The trust details must be completed in section 4.1 of the Purchaser/Transferee Declaration when any purchaser/transferee is acting as trustee.

References