What is a NSW Land Tax Unit Trust?

Question

What is a NSW Land Tax Unit Trust?

 

Answer

Revenue NSW defines a Trust for land tax purposes as a Unit Trust, where the Unitholders (Beneficiaries) are considered to be owners of the land, as of midnight on 31 December prior to the tax year.

This specific type of Trust is only applicable in NSW and is a Fixed Unit Trust, whereby the Unitholders are entitled to a fixed portion of income and capital distribution from the Trust.

Revenue NSW requires that the Deed must meet the following criteria:

  • The Unitholders must be entitled to all income of the Trust
  • The Unitholders must be 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
  • Unitholder entitlements cannot be removed, restricted or otherwise affected by the exercise of any discretion or by failure to exercise any discretion
  • There must be only one class of Units issued, and the portion of Trust capital to which a Unitholder is entitled on winding up, or surrendering of units, must be fixed and must be the same as the portion of income of the Trust to which the Unitholder is entitled.

If a Fixed Unit Trust meets the above criteria and requirements of section 3A of the Land Tax Management Act for Land Tax purposes, the Fixed Unit Trust will not be deemed a Special Trust and will therefore be entitled to receive the Land Tax threshold.

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