The Land Tax (Discretionary Trusts) Amendment Bill 2021, introduced to State Parliament, gave trustees additional time to consider their land holding arrangements to 31 December 2021. As this date is fast approaching we suggest you act now!
A trustee of a discretionary trust may nominate a designated beneficiary for pre-existing trust land and that nomination can also apply to their 2020-21 land tax assessment and future years.
Where a nomination is made, the trustee is taxed at the lower general rate of land tax, rather than the higher trust land tax rates.
You may have already received your 2021 Land Tax Assessment Notice. We suggest you check this to determine whether the rate applied is correct.
Why should a designated beneficiary be nominated for a discretionary trust by 31 December 2021?
If a designated beneficiary is nominated for a discretionary trust by 31 December 2021:
Land tax will be assessed against the land held on behalf of the trust at general land tax rates. The trustee of the trust will be responsible for payment of this land tax; and
If the designated beneficiary owns other land, the land held on behalf of the trust will also be assessed in their ownership along with any other interests in land that they own. A deduction equal to the land tax assessed against the trustee will apply, reducing the land tax to be paid by the beneficiary by that amount.
The designated beneficiary must:
be a natural person who is over 18 years of age at the date of nomination; and
have been a beneficiary of the trust as at midnight 16 October 2019.
What happens if a designated beneficiary is not nominated for a discretionary trust by 31 December 2021?
If a designated beneficiary is not nominated for a discretionary trust, or if the notice of designated beneficiary is submitted after 31 December 2021, land tax will be assessed against the trust held land at the trust land tax rates. These rates are higher than the the general land tax rates.