In October last year, legislation was introduced by the NSW government to treat discretionary trusts as foreign trusts, liable for both surcharge purchaser duty and surcharge land tax, unless trustees amended their deeds to include the foreign beneficiary exclusion.
Under the proposed legislation, transitional provisions allowed deeds to be amended by 31 December 2019 to include the foreign beneficiary exclusion.
Despite the passing of the deadline, Revenue NSW noted that the bill was yet to be passed by the Parliament, offering an extension to the transitional arrangement to an unspecified date in 2020.
“The bill currently requires affected deeds to be amended by 31 December 2019. As the bill has yet to be passed by the Parliament, the government intends to extend this deadline to a later date, in 2020,” Revenue NSW said in a statement in December.
Velocity Legal director Andrew Henshaw believes affected trusts have been given a lifeline to avoid retrospective duty and land tax.
“Given that the original end date of 31 December 2019 has now lapsed without any legislation being enacted, the extension of the deadline to implement the Foreign Beneficiary Exclusion appears to be sensible,” Mr Henshaw wrote in a LinkedIn post.
“While the best time to plant a tree was yesterday, the second-best time is today.
“Trustees of discretionary trusts that own residential property in NSW, and who have not already taken action, now have a final window of opportunity to avoid retrospective duty and land tax. It is strongly recommended that affected trustees consider taking immediate action to amend their trust deeds.”
LMS Advisory director Alexander Laureti, who sent an urgent note to clients late last year, believes there may have been a number of clients who missed the 31 December deadline because of the short lead time.
“There’s probably a whole bunch of clients out there who haven’t heard of it and dealt with it yet, so I’d probably be saying if you haven’t done it yet, do it ASAP,” Mr Laureti said.
“If you had amended by 31 December 2019, you are ahead of the game.
“If you haven’t, make time for it, speak to your solicitor, speak to your adviser, speak to whoever prepared your deed in the first place.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.