Family unit trusts
A family unit trusts receives the land tax threshold.
A family unit trust is classified as a fixed trust when:
- land is held at midnight on 31 December 2005 with a taxable value of $1 million or less
- the unit holders have a fixed entitlement to income or capital
- 95 per cent or more of the units are owned by the same family group.
A family group consists of:
- people who are related to each other by blood, as well as adopted children and their spouses
- the ultimate beneficiary, if any of the units are owned by a trustee - this excludes discretionary trusts.
Certain criteria must be met to qualify as a family unit trust. Family unit trust has the meaning given by Schedule 1AA (2) of the Land Tax Management Act 1956).
- If a person holds units as trustee – e.g. as trustee of a complying superannuation trust - and the members of the trust are all members of the same family group, the units will be regarded as being owned by members of the same family group for the purposes of determining whether the 95 per cent test is satisfied.
- If the trust acquires additional land after midnight 31 December 2005 that makes the combined taxable land over $1 million, the trust will be assessed as a special trust for the tax year following the purchase.
- The unit holders are entitled to a fixed proportion of any distribution of income or capital of the trust made by the trustee, based on the proportion of income or capital units that each person owned in the trust.
- If any new units are issued, redeemed or cancelled, the trust will continue to be assessed as a fixed trust, provided the proportion of units owned by members of the same family group remains at least 95 per cent. If the trust doesn’t meet this requirement, it’ll become liable as a ‘special trust’ for the following land tax year.