Foreign Person Surcharge & Family Trusts

Victoria, Queensland, NSW, and South Australia have all imposed foreign person surcharges on Stamp Duty and/or Land Tax, with Western Australia due to follow in 2019. Each state has its own legislation which deal with how these surcharges apply to Family Trusts and their respective beneficiaries. Read on to find out how it affects your family trust deeds.

Overview of the Foreign Person Surcharges

On 12 December 2017, the South Australian Parliament amended the Stamp Duties act to introduce a foreign ownership surcharge. What this means is that from 1 January 2018, foreign persons or foreign trusts that acquire an interest in residential land in South Australia are required to pay a foreign ownership surcharge (in addition to the regular stamp duty payable) of 7% of the value of the interest in residential land.

South Australia now joins the ranks of Victoria (with a stamp duty surcharge on certain foreign purchasers of residential land, as well as a land tax surcharge for certain 'absentee owners' of Victorian land), NSW (with a stamp duty surcharge on certain foreign purchasers of residential land, as well as a land tax surcharge for certain foreign owners of NSW land), and Queensland (with a stamp duty surcharge). Western Australia is due to follow suit in 2019.

It is important to realise that some States may automatically define your client’s family trust as a foreign trust unless otherwise notified. Therefore it may make sense to include a specific provision within your trust deeds to exclude foreign beneficiaries if this is something you are concerned about. More on this later.

foreign person surcharge

Working out if your client's trust is a foreign trust

Each state has its own legislation which deals with how these surcharges apply to Family Trusts, and the definitions and criteria described in the legislation differs between states. We therefore recommend that you seek legal advice to see how your Trust is affected and whether it needs to be updated so that it is not liable to incur the surcharges in the future.

South Australia

For example in South Australia when determining whether your discretionary family trust is a foreign trust, the following general rules apply:

  • Fixed (Unit) Trust - where the beneficial interests of a trust are fixed, a trust will be a foreign trust where a beneficial interest of 50% or more of the capital of the trust property is held by one or more foreign persons.
  • Discretionary (Family) Trust - where one or more of the following is a foreign person, the trust may be considered a foreign trust:
    • a trustee;
    • a person who has the power to appoint under the trust;
    • an identified object under the trust; and a
    • person who takes capital of the trust property in default.

New South Wales

However in New South Wales, a family or unit trust may be regarded as a foreign if:

  • substantial interests are held by a beneficiary who is an individual and is not ordinarily a resident of Australia, a foreign corporation or a foreign government
  • aggregate substantial interests are held by two or more individuals who are not ordinarily residents of Australia, a foreign corporation or a foreign government.

For a discretionary trust, each beneficiary to whom the trustee has discretion to distribute the income or property is deemed to have the maximum percentage interest in the income or property that the trustee may exercise a discretion to distribute to them.

The result is that any beneficiary who is a foreign person will almost always be deemed to hold a substantial interest in the trust, and the trustee will be deemed to be a foreign person who will be potentially liable for surcharge purchaser duty and surcharge land tax. Discretionary trust deeds often give the trustee wide powers to distribute income and/or property, such as to family or other relatives of the settlor and in many cases to charities. If any one of the potential beneficiaries is a foreign person, the trustee may be liable for surcharge.

Consequently, a discretionary trust may be liable for the foreign person surcharges even though none of the beneficiaries who actually receive or are likely to receive distributions of income or capital are foreign persons.

Other States

As mentioned the legislation relating to foreign person surcharges on acquisition of land is drafted on a state by state basis, and therefore clients will need to consider the implications on their trust deed depending on where their trust is registered and where any related property is acquired.

Excluding Foreign Person from our Trust Deeds

If someone is considering setting up a trust to acquire land in one of the above States, and do not want any foreigners to be beneficiaries, they can request a deed from that includes a provision that explicitly excludes foreign persons as primary or secondary beneficiaries. When completing the 'Beneficiaries' section of our online order form, simply select the option to exclude foreign persons.

Including a broad provision in this manner provides certainty that your family trust will not be deemed a foreign person in any state, regardless of the differing definitions as defined within each state’s legislation.

An alternative approach would have been to include specific provisions in the trust deeds adapted to each state’s differing legislation, however we believe our approach is the most effective way to avoid additional complexity on a national basis, whilst still retaining the same effectiveness. This also provides greater flexibility where a trust is registered in one state but where property is ultimately purchased in another.

Order Discretionary Trust Online   Exclude Foreign Persons - Deed Amendment

What if someone has an existing discretionary trust deed and is looking at acquiring, or has already acquired, land in one of the above States?

Again, this is something that will change on a state by state basis. If your family trust is registered in South Australia and you are acquiring or acquired property in South Australia, then as long as one of your primary beneficiaries or trustees is not a foreign person (as defined), then you may be able to avoid the foreign person surcharge. However if you are not clear then you should seek legal advice.

If you would like to achieve certainty, particularly if your trust deed or property acquisition is in NSW or Victoria, then we can amend your trust deed to specifically exclude foreign persons. Please get in touch to discuss our services and pricing.

Further Reading

South Australia

The full Stamp Duties (Foreign Ownership Surcharge) Amendment Act 2017 can be found here.
RevenueSA guidance on the issue can be found here.


Stamp duty – refer SS.3, 3B and 28A of the Duties Act 2000 (Vic). Applies from 1 July 2015.
Land tax – refer S.46IA of the Land Tax Act 2005 (Vic) (and S.3 of that Act for the relevant definitions). Applies (basically) from 31 December 2015.


Stamp duty – refer S.104J of the Duties Act 1997 (NSW), and SS.4 and 18 of the Foreign Acquisitions and Takeovers Act 1975 (Cth). Applies from 21 June 2016.
Land tax – refer S.5A(6) of the Land Tax Act 1956 (NSW) and SS.4 and 18 of the Foreign Acquisitions and Takeovers Act 1975 (Cth). Applies (basically) from 31 December 2016.


Stamp duty – refer S.237 of the Duties and Other Legislation Amendment Bill 2016 (Qld) and SS.57 and 60 of the Duties Act 2001 (Qld). Applies from 1 October 2016.
Land Tax – No new surcharge, but all trusts pay a higher rate of land tax in Queensland.


Note: The South Australian duty surcharge is to apply from 1 January 2018 and the Western Australian duty surcharge is proposed to apply from 1 January 2019.

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Please note this article is for information purposes only and does not constitute legal advice. Should you have any queries or require more information, please contact the team at