Victorian discretionary trusts face foreign purchaser additional duty
Victorian discretionary trusts intending to purchase residential land should take action now to avoid the 8% foreign purchaser additional duty.
From 1 March 2020, many Victorian discretionary trusts face foreign purchaser additional duty of 8% of the purchase price for residential property they acquire.
Currently trusts that have foreign beneficiaries who have not and who are unlikely in the future to receive any distributions, will not be considered a foreign trust hence are not subject to additional duty when they acquire property.
The Victorian State Revenue Office (SRO) has announced that from 1 March 2020, if the discretionary trust has any potential foreign beneficiary, the trust will generally be a foreign trust and subject to 8% additional duty on applicable purchases. SRO is removing an administrative concession that has been in place for several years. As such, the announced change is not subject to the passage of an amendment through Parliament.
Trustees of discretionary trusts are advised to take action in respect of this announcement. The current position will apply for dutiable transactions where the contract of sale has been entered into before 1 March 2020. Where a trust intends to acquire residential property from 1 March 2020, the trustee can amend the trust deed so that there are appropriate exclusions for foreign natural persons, foreign corporations or trustees of foreign trusts from being potential beneficiaries.
To discuss the impact of the changes or for support facilitating a review of your discretionary trust deed please contact your usual Mazars advisor or alternatively our tax specialists:
Melbourne – Evan Beissel | Sydney – Stephen Baxter | Brisbane – Jamie Towers |
+61 3 9252 0800 | +61 2 9922 1166 | + 61 7 3218 3900 |
Published: 19/2/2020
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice. Content is accurate as at the date published.
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