Estate Group update: Planning to purchase residential property this year in a family trust? New surcharge to take effect soon!Feb 6, 2020
From 1 March 2020, the Victorian State Revenue Office is changing its approach to the foreign duty surcharge on residential property acquired by discretionary trusts.
Discretionary trusts will be liable for the additional 8% duty charge if more than 50% of the trust’s capital could be distributed to a foreign person, company or trustee of a foreign trust.
A distinctive feature of many discretionary trusts is the wide group of potential beneficiaries, which may (intentionally or otherwise) include foreign persons, companies or trustees of foreign trusts.
What to do to avoid the new surcharge?
If residential property is to be purchased by a discretionary trust (whether the trust is already in existence or is to be established prior to the purchase) from 1 March 2020, to avoid the surcharge, the trust deed should be reviewed and amended to exclude foreign beneficiaries prior to settlement.
If you need advice on, or assistance with, a discretionary trust, please contact our Estate Group on (03) 8600 8885.
This Estate Group update was authored by Ainsleigh Valentine, Associate.
Note: This update is a guide only and is not intended to constitute legal advice.