Discretionary Trusts and property purchases

Don’t get caught paying additional stamp duty. 

Back on 1st July 2015 a change was introduced by the Victoria State Government to charge an additional amount of stamp duty to any foreign purchasers of Victoria real estate. Currently the additional rate is 8% of the property value at the time of purchase.

Discretionary trusts have technically been caught under this law change as by their very nature, a discretionary trust can distribute its assets to basically anyone, including foreign residents.

Up until this point the State Revenue Office applied what it called a “practical approach”  where they will not apply the foreign purchasers duty where it is unlikely that a discretionary trust will distribute to a foreign beneficiary.

From 1st March 2020 however this will change and now any discretionary trust will be treated as a foreign purchaser unless the trust deed specifically prohibits distributions to any foreign beneficiary.

This is a very substantial change so please make sure you contact us before purchasing a property if you have a discretionary trust in your structure.

The additional duty can also apply to property purchases by a unit trust or a company where the units/shares in that entity are owned by a discretionary trust.

If you have any queries, please contact our office to speak with one the experienced Accountants at Patrick Rowan & Associates tel: 5221 7655.