On 3 February 2020, the Victorian State Revenue Office (“SRO”) decreed that it will stop applying the practical approach (that it had been using since 1 July 2015) to foreign purchaser additional duty as from 1 March 2020. Under its practical approach, the SRO presently treats discretionary trusts that may have foreign beneficiaries but who have not received any distributions and were unlikely to receive any future distributions, as not being a foreign trust.
However, from 1 March 2020, the SRO will treat discretionary trusts that have potential foreign beneficiaries as a foreign trust for the foreign purchaser additional duty surcharge purposes unless the trust’s deed is amended by the insertion of a clause that expressly excludes the foreign persons (as defined under the Duties Act 2000 (Vic)) as potential beneficiaries of the trust. This amendment needs to be in place prior to the settlement of a dutiable transaction.
Therefore, it is important that trustees purchasing residential land in Victoria review their trust deeds prior to the settlement of any land contract to avoid foreign purchaser additional duty.
More information can be found here … https://www.sro.vic.gov.au/foreign-purchaser-additional-duty-and-discretionary-trusts-2020
Please contact us should you wish to learn more on how this recent change may impact upon your circumstances