New Land Tax Surcharge for “Foreign Beneficiaries” and/or “Absentee Persons”: New South Wales and Victoria have introduced new regimes where foreign persons and most trusts will be liable to additional land tax when owning property in those States.
- For clients who hold Trusts that have Foreign Beneficiaries of residential property in NSW (or likely to have foreign beneficiaries in the future), will be need to review and most likely amend trust deeds before 31 December 2016 to avoid an increase in land tax for 2017. The land tax surcharge will be an increase of 0.75%.
- For clients who hold Trusts that have Foreign Beneficiaries of property owned in Vic (or likely to have foreign beneficiaries in the future), will need to review and most likely amend trust deeds before 1 January 2017 to avoid an increase in land tax for 2017. The land tax surcharge will be an increase of 1.5%.
In NSW the Land Tax Surcharge affects “foreign persons” who own residential land or are beneficiaries of trusts that own residential land.
A foreign person is defined to include:
- An individual not ordinarily resident in Australia (except for Australian citizens or a New Zealand citizen who holds a Special Category Visa (Subclass 444));
- A corporation or trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest (20%). A deeming rule provides that all beneficiaries of discretionary and hybrid trusts including PITs have a substantial interest.
If this applies to you, please contact your Client Manager or Accountant immediately.
In Victoria the new laws affect “absentee persons” who own any land in Victoria.
An absentee person is defined to include:
- A natural person absentee: a person that is not an Australian or New Zealand citizen or a permanent resident of Australia, who does not ordinarily reside in Australia;
- An absentee corporation: a corporation incorporated outside Australia or a corporation in which an absentee person, or that person together with another absentee person, has a controlling interest; or
- A trustee of an absentee trust: a trust that has at least one absentee beneficiary.
If this land tax surcharge applies to you, please contact your Client Manager or Accountant immediately.
For Chan & Naylor clients that are not Australian citizens or have family that are not Australian citizens – that owns or is a beneficiary of a property in either NSW or Vic – then please contact your Client Manager as soon as possible.