--- title: Changes to New South Wales State Revenue Legislation description: Changes to New South Wales State Revenue Legislation image: https://blog.eastcoastlaw.com.au/hubfs/Depositphotos_24693751_l-2015.jpg --- - [Home](https://www.eastcoastlaw.com.au/) - [Family Law](https://www.eastcoastlaw.com.au/family-law/) - [Conveyancing](https://www.eastcoastlaw.com.au/conveyancing/) - [Business Law](https://www.eastcoastlaw.com.au/business-law/) - [Contact Us](https://www.eastcoastlaw.com.au/contact-us/) [Conveyancing](https://pages.eastcoastlaw.com.au/living) ### A blog for easier living Life was meant to be easy Today's world throws us many curveballs. Join us for tips & life hacks that straighten the curves & help you enjoy the ride. Sign up   [Living Blog Home](https://pages.eastcoastlaw.com.au/living) [Family Law](https://blog.eastcoastlaw.com.au/living-blog/tag/family-law) [Conveyancing](https://blog.eastcoastlaw.com.au/living-blog/tag/conveyancing) [Featured](https://blog.eastcoastlaw.com.au/living-blog/tag/featured) [Business](https://blog.eastcoastlaw.com.au/living-blog/tag/business) # Changes to New South Wales State Revenue Legislation Nov 28, 2019 12:44:23 PM ![Depositphotos_24693751_l-2015](https://blog.eastcoastlaw.com.au/hubfs/Depositphotos_24693751_l-2015.jpg) The New South Wales Government recently introduced a Bill relevant to trustees of discretionary trusts that either own or will own residential land in New South Wales. It deals with when the surcharge purchaser duty and surcharge land tax that are aimed at foreign persons will apply to discretionary trusts. The surcharge purchaser duty is currently 8% (i.e. in addition to the duty otherwise payable) and the surcharge land tax is currently 2% (i.e. in addition to the land tax otherwise payable). **The State Revenue Legislation Further Amendment Bill 2019 (NSW) (“Bill”)** will make the following key changes: - The Rules for determining when an entity is a “land holder” will be tightened up so that having land holdings in New South Wales with an unencumbered value of $2,000,000.00 or more will make the entity a land holder (rather than applying the valuation test just to the unimproved land); - Land for the purposes of land holder duty going forward will expressly include anything fixed to the land whether or not a fixture; - Liability for land holder duty will extend to the land holder itself under new provisions imposing joint and several liability on the acquisition of interest in the land holder on both the acquirer and the land holder. These provisions will also place a charge on land for unpaid land holder duty; - The circumstances in which a discretionary trust will be treated as a foreign trust for the purposes of surcharge purchaser duty are prescribed; and - The provisions imposing duty on deemed assignments of call options will also be tightened up. **Valuation Threshold** Under the current rules applying land holder duty, a land holder will be treated as such if it has land holdings in New South Wales with an unimproved value of $2,000,000.00 or more. Under amendments set out in the Bill, a new test to value will  operate on the basis of “unencumbered value” rather than improved value. The new test will be closer aligned with the value test of other jurisdictions. **Foreign Trusts** Under provisions introduced in 2016 duties were imposed on certain foreign persons including relevant foreign trustees acquiring residential land in New South Wales. A new section 104JA sets out provisions as to when the trustee of a discretionary trust is taken to be a foreign trustee. A trustee will be regarded as a foreign trustee unless **the trust prevents a foreign person from being a beneficiary of the trust. This will specifically require that no “potential beneficiary” of the trust is a foreign person. A person is a potential beneficiary of a discretionary trust if the exercise or failure to exercise a discretion can result in any property of the trust being distributed to or replied for the benefit of the person.** A further requirement is that the terms of the trust are not capable of amendment in a manner that would result in their being a potential beneficiary who is a foreign person. **Recommended Action** The effect of these changes is that all discretionary family trust of the usual kind holding residential land in New South Wales will need to be amended to included provisions covering the matters set out above if the trustee is to stay outside the duty’s regime applying to foreign persons. Under transitional rules, the trustees of discretionary trusts are generally allowed until 31st December 2019 to amend terms of trusts in order to satisfy the new requirements. In addition in relation to Discretionary trusts established prior to the Bill receiving assent deeds and any amendments need to be reviewed to determine whether any further amendments are required if the trustee acquired any residential land in NSW on and from 21 June 2016 or owned any residential land in NSW on and from 31 December 2016 It is important that your discretionary family trust deed be reviewed if the above is applicable to your land holdings. Please let us know if your discretionary trust requires review with a view to making the amendment to satisfy the recent changes to the New South Wales Revenue Law. 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