What is a foreign beneficiary?

Various state governments in Australia have introduced tax surcharges for foreign persons who hold or acquire interests in property within a particular jurisdiction. If you are a foreign purchaser and you acquire property, as well as land transfer duty you may have to pay foreign purchaser duty (additional duty) or surcharge land tax. Surcharges include:

• Surcharge Land Tax (NSW)
• Surcharge Purchaser Duty (NSW)
• Foreign Person Additional Duty (VIC)
• Foreign Investor Duty Surcharge (TAS)

What is a Foreign Person?

The definition of foreign persons is formulated by various laws. You may be a foreign person if you meet the requirements of these acts:

• Land Tax Act 2005 (Vic)
• Duties Act 2000 (Vic)
• Duties Act 2001 (Qld)
• Land Tax Act 1956 (NSW)
• Duties Act 1997 (NSW)
• Duties Act 2001 (Tas)
• Foreign Acquisitions and Takeovers Act 1975 (Cth)

What are the limitations this deed of variation?

Issues that may not be contemplated by drafting a deed of variation may include:

• Consideration as to whether a foreign person has control over the trust. This may include their position as a trustee, appointor or director/shareholder of a trust.
• Should the trust deed contain named or specified beneficiaries that are foreign beneficiaries, legal advice is required. It is not sufficient that named beneficiaries are merely prevented from receiving distributions, e.g. through a general clause excluding foreign persons from being beneficiaries.
• All unpaid entitlements to foreign beneficiaries may need to be reviewed

Other questions in Discretionary Trust