A fixed trust is eligible for the land tax threshold.
A fixed trust is where the beneficiaries or unit holders are considered owners of the land as at the taxing date, because they’re entitled to the income and capital of the trust, and these entitlements can’t be varied by the trustee in any way.
A fixed trust includes some unit trusts and bare trusts. (Fixed trust has the meanings given by Section 3A (2) and Sections (3A) and (3B) of the Land Tax Management Act 1956.
To qualify as a fixed trust, the trust deed must satisfy the following:
A unit trust that doesn’t meet the relevant criteria and is a special trust, can restructure its trust deed so it’s considered a fixed trust for future tax years.
To make sure amended deeds meet the requirements, visit our secure online portal and upload:
Before you amend a trust deed, we recommend you seek professional financial and legal advice.
Learn more about amending a unit trust deed in the Commissioner’s practice note: Unit trust deed amendments.
If a trust satisfies the relevant criteria, the beneficiaries of the trust are taken to be owners of an equitable estate in the land and are liable for land tax, as if they were legal owners of the land. They are treated as secondary taxpayers as per Section 25 of the Land Tax Management Act 1956.
Therefore, a unit holder’s interest in the unit trust, which owns other taxable land, or is a special trust, is assessed on the combined value of their interest in the land held in the trust, and any other taxable land owned. They may be entitled to a secondary deduction to prevent double taxation.
All fixed unit trusts must provide details of the unit holders.
A unit trust may be a special trust, a fixed trust or a family unit trust.
To be a fixed trust, certain criteria apply. If they don’t apply, the trustee can restructure the trust deed to meet the criteria, but the threshold will only apply from the next tax year.
Unit trusts must meet the criteria outlined in section 3A(3B) of the Land Tax Management Act 1956 to be considered a fixed trust.
A trustee must lodge a land tax return, if the land is subject to a trust. A copy of the trust deed should be lodged with the return.
If a beneficiary or a unit holder owns other taxable land, or is a special trust, they’re assessed on the combined value of their interest of the land held in the trust and any other taxable land owned. They may be entitled to a secondary deduction to prevent double taxation.
A bare trust is a type of fixed trust, where the trustee and defined beneficiaries have complete control of the trust.
Given their structure, the land tax implications of bare trusts vary.