Reminder: 30 June 2021 deadline to nominate beneficiary for discretionary trusts holding South Australian land acquired pre-16 October 2019.
As part of the measures introduced in The Land Tax (Miscellaneous) Amendment Act 2019 (Amending Act), surcharge rates (0.5% higher than marginal rates applied to non-trusts holdings) of land tax will be imposed on certain types of trusts including discretionary, fixed and unit trusts commencing from 1 July 2020.
However, Trustees of discretionary trusts holding land acquired on or before 16 October 2019, have the option to continue accessing the lower general rates of land tax. This can be done by nominating a natural person beneficiary as the owner for land tax purposes. The deadline to nominate ends on 30 June 2021. There will be no option to nominate after this deadline and discretionary trusts without a nominated beneficiary will be subject to the surcharge rates.
If the designated beneficiary owns other land, the land will be assessed in their ownership along with any other interests in land that they own. Consideration will therefore need to be given as to whether to nominate a beneficiary and, if so, which beneficiary. Once made, the nomination can only be changed in very limited circumstances.
Land acquired after 16 October 2019 by a discretionary trust will be assessed at the higher trust land tax rates. There is no exception to this, even if the trustee nominates a beneficiary for other land acquired by the trust prior to 16 October 2019.
Trust notification requirements
A reminder that any person holding land as a trustee as at 30 June 2020 was required to notify Revenue SA by 31 July 2020 of the land owned on trust.
For land acquired after 1 July 2020, you must notify Revenue SA within one month of acquiring any land on trust.
Aggregation of land
Another significant impact from the Amending Act is the aggregation of land holdings by companies and individuals.
Nomination of beneficiaries – Fixed and unit trusts
Trustees of fixed and unit trust also have an option to notify the Commissioner of State Taxation of the unitholders or beneficiaries, resulting in each unit holder being deemed the owner for the purpose of the Amending Act and taxed at normal tax rates accordingly on their proportion of the subject land.
This nomination can be made at any time and will be effective for the current and future financial years unless revoked.
How SW can help
If you own land in South Australia through a trust structure and or need assistance navigating these amendments, reach out to your SW contact our property experts below for assistance.