New South Wales Consolidated Acts

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LAND TAX ACT 1956 - SECT 5D

Surcharge land tax--discretionary trusts

5D Surcharge land tax--discretionary trusts

(1) The trustee of a discretionary trust is taken to be a foreign person in that capacity for the purposes of section 5A if the trust does not prevent a foreign person from being a beneficiary of the trust.
(2) If a discretionary trust prevents a foreign person from being a beneficiary of the trust, the trustee is not in that capacity a foreign person for the purposes of section 5A.
(3) A discretionary trust is considered to prevent a foreign person from being a beneficiary of the trust if (and only if) both of the following requirements are satisfied--
(a) no potential beneficiary of the trust is a foreign person (the
"no foreign beneficiary requirement" ),
(b) the terms of the trust are not capable of amendment in a manner that would result in there being a potential beneficiary of the trust who is a foreign person (the
"no amendment requirement" ).
Note : Under the transitional arrangements for this section in Schedule 2 to the Principal Act, the no amendment requirement does not apply to a trust that satisfies the no foreign beneficiary requirement immediately before the commencement of this section.
(4) A person is a
"potential beneficiary" of a discretionary trust if the exercise or failure to exercise a discretion under the terms of the trust can result in any property of the trust being distributed to or applied for the benefit of the person.
Note : A potential beneficiary is not limited to persons named in the trust instrument and extends to the members of any class of persons to whom or for whose benefit trust property can be distributed or applied pursuant to the discretions of the trust.
(5) For the removal of doubt, a person is not a potential beneficiary of a discretionary trust if the terms of the trust prevent any property of the trust from being distributed to or applied for the benefit of the person.
(6) In this section,
"property" includes money, and a reference to the distribution or application of property includes a reference to the payment of money.
(7) Chapter 11A (Tax avoidance schemes) of the Duties Act 1997 applies in respect of the avoidance of surcharge land tax in connection with the operation of this section in the same way as that Chapter applies in respect of the avoidance of duty under that Act, and for that purpose--
(a) a reference in that Chapter to duty is to be read as including a reference to surcharge land tax, and
(b) a reference in that Chapter to "this Act" is to be read as a reference to the Land Tax Act 1956 and the Land Tax Management Act 1956 .



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