Since 2015, the various State Revenue Offices (SROs) have been introducing potential surcharges on trusts that do not exclude foreign persons (or “absentees”) as beneficiaries, or, have foreign persons acting as trustee and hold property in the trust. Generally speaking, ‘foreign person’ means a person (or entity) that does not ordinarily reside in Australia and can include:
- an individual
- a corporation
- a trustee of a trust
- a beneficiary of a trust
- a government
- a government investor
- a partner in a limited partnership.
Even if a foreign person has not been named as a beneficiary, due to the general pool of beneficiaries defined in the deed, a foreign person may in fact be eligible to receive distributions thus the trustees may be liable for surcharge payments even when they have not, nor do they intend to, distribute to foreign persons.
Patricia Holdings offer two versions of our Family (or Discretionary) Trust Deeds for whether you wish to allow or disallow foreign persons from benefiting from the trust. If your deed has already been prepared and does not currently exclude foreign persons, we can prepare an amendment for you irrevocably excluding foreign persons from benefiting. This amendment can be ordered here.
For an overview of the surcharges currently in place around the country, please download our fact sheet.