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Unit Trusts

Learn what an Australian fixed unit trust is, how best to manage a unit trust set up in Australia and more.

What is a Fixed Unit Trust for NSW Land Tax purposes?

Revenue NSW’s definition of a Fixed Trust states that it is a trust where the beneficiaries (or Unit Holders) are considered to be owners of the land at the taxing date of midnight on 31 December prior to the tax year.

This type of Trust applies only to NSW. It is a standard Unit Trust whereby the unit holders are entitled to a fixed proportion of income and capital distribution from the Trust. Revenue NSW stipulates that the Deed must meet the following criteria:

  • The unit holders are entitled to all income of the Trust (after the payment of normal expenses)
  • The unit holders are presently entitled to the capital of the Trust and may require the Trustee to wind up the Trust and distribute the property or the net proceeds of the Trust
  • Unit Holder entitlements cannot be removed, restricted or otherwise affected by the exercise of any discretion or by failure to exercise any discretion.
  • There must only be one class of units issued and the proportion of trust capital to which a unit holder is entitled on winding up or surrendering of units must be fixed and must be the same as the proportion of income of the trust to which the unit holder is entitled.

If a Trust meets the requirements of section 3A of the Land Tax Management Act, then the Trust will not, for Land Tax purposes, be deemed a Specialty Trust and will be entitled to the benefit of the Land Tax threshold exemptions available in NSW.

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