As the end of the year approaches, trustees and their advisers should review any trust structures that hold property in New South Wales, Victoria or the Australian Capital Territory before the 31 December land tax assessment date.
Timely action now can help manage risk and avoid unnecessary tax exposure — especially in relation to foreign person surcharge land tax and, for NSW unit trusts, maintaining access to the land tax-free threshold.

Surcharge Foreign Person Land Tax for Discretionary Trusts

For the 2025–26 land tax year, each of these states and territories applies a surcharge on residential land owned by entities deemed to be “foreign persons.” These rates are in addition to the normal land tax rates:

• New South Wales: 5%
• Victoria: from 4%
• ACT: 0.75%

By default, discretionary trusts are treated as if they have foreign beneficiaries, unless the trust deed specifically excludes foreign persons from being potential beneficiaries.

In NSW, the rules go even further — the exclusion must be irrevocable, meaning it cannot later be reversed or amended. This requirement was introduced in 2020, so many older trust deeds may not comply.

If your client’s trust deed predates this change or doesn’t contain an explicit irrevocable exclusion, the trust may be liable for the surcharge, even if all beneficiaries are Australian residents.

Super Funds and Bare Trusts

If you hold property within a Self-Managed Superannuation Fund (SMSF) — either directly, through a unit trust, or via a bare trust (custodian trust) — it’s important to ensure that NSW Revenue has the correct documentation on file.
If the required trust documents haven’t been lodged correctly, you could accidentally be assessed for higher land tax than you should be.

If you’re unsure whether your SMSF or property trust is properly recorded with NSW Revenue, give us a call — we can check your records and make sure everything is in order before the 31 December deadline.

What Trustees Should Do Now

To avoid unnecessary land tax liabilities, trustees should:

1. Review their trust deeds before 31 December 2025.
2. Confirm whether a valid and irrevocable foreign person exclusion clause is already in place.
3. Ensure any SMSF, unit trust or bare trust documents have been correctly lodged with NSW Revenue.
4. Amend trust deeds if required — but note that any amendment must be executed before midnight on 31 December to be effective for the 2025/26 land tax year.

Need Assistance?

At Divergent Numbers, we can help review and update trust deeds, confirm SMSF and bare trust registrations, and ensure compliance with the latest state land tax rules.
Acting now could save significant surcharge liabilities and protect your trust’s eligibility for thresholds and exemptions.

If you’re unsure whether your trust or super fund structure meets current requirements, contact our office as soon as possible to arrange a review.