Changes to the rules surrounding NSW Land Tax back in January 2017 introduced a surcharge where the land is owned by a foreign person or legal entity.  This surcharge is levied on the value of the land over and above base land tax charges at a rate of two per cent.

Unintentionally, the wording of the legislation resulted in any discretionary trust being defined as a foreign entity, and as such, any NSW land owned in a trust subject to the land tax surcharge.

In response to this, the State Revenue Legislation Further Amendment Bill 2020 (NSW) has been passed and is ready for presentation to the Legislative Council. The Bill will amend the rules to ensure that, should certain conditions be met – a discretionary trust will not, by default, be considered foreign.

To ensure land that you own in a discretionary trust is not subject to the Land Tax Surcharge, you must meet the following conditions:

  1. No foreign beneficiary requirement. You need to ensure that your trust deed specifically excludes foreign persons as beneficiaries.
  2. No amendment requirement. Additionally, the terms of the trust should be such that no amendment can be passed to allow foreign beneficiaries in the future.

While NSW state revenue has recognised the issue, they do recommend taking relevant action as soon as possible to avoid undue fees.

If this Amendment Bill applies to you or you have any question about this, feel free to contact us and we will be happy to assist. You can call Adrians and speak to one of our managers or partners on 07 3832 7544 or email us at

Billy Halim