Why trusts are looked through
A trustee holds the land, but the beneficiaries benefit from it. Each state therefore asks who holds the beneficial interest, and treats the trust as foreign if foreign persons hold enough of it. The common types are fixed trusts, unit trusts and discretionary trusts, and a trust that mixes features is classified by what its deed actually provides, not by its name.
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What triggers the surcharge in each state
| State | Test for a trust | Discretionary trusts |
|---|---|---|
| NSW | A foreign person (non-resident individual, foreign corporation or government) holds a substantial interest of at least 20%, or foreign persons together hold at least 40% | Foreign unless no beneficiary or potential beneficiary is foreign and the trust terms cannot be amended to make one a potential beneficiary |
| Victoria | An absentee trust has at least one beneficiary, unit holder or beneficial owner who is an absentee person | At least one specified beneficiary (named in the deed, who may receive income or property) who is absentee |
| Queensland | A foreign trust is one where at least 50% of the trust interests are held by foreign persons, or their related persons | Special rules apply, including for takers in default |
| Tasmania | Foreign if a foreign natural person, foreign corporation or foreign trustee has a substantial interest; all trusts are deemed foreign unless proved otherwise | Any discretionary trust with potential foreign beneficiaries is likely foreign |
| ACT | A trust where foreign persons and their associates hold a controlling interest of 50% or more of the beneficiary interests | A foreign person counts only if specifically named in the deed as someone a distribution can be made to |
NSW applies these tests for both surcharge purchaser duty and surcharge land tax. Victoria's table is for the absentee owner surcharge, while Victoria's foreign purchaser additional duty uses its own test: a substantial interest means more than 50% of trust capital or practical influence, and the SRO says a discretionary trust with any potential foreign beneficiaries is generally foreign.
Discretionary trusts: potential beneficiaries count
Most family trusts are discretionary, which is where the states diverge the most.
NSW. Revenue NSW's test has two limbs. No beneficiary or potential beneficiary may be a foreign person, and the trust terms must not be capable of amendment that would add a foreign potential beneficiary. If either is missing, the surcharge applies even if the trustee never intends to distribute to a foreign person. There is a grandfathering rule: if a trust met the no foreign beneficiary requirement before 24 June 2020, the trustee is exempt without needing to meet the no-amendment limb.
Victoria. The test looks at specified beneficiaries, who are named in the deed and may receive income or property. It does not look at the nominated beneficiary, and a specified beneficiary is not the same as a taker in default, although the two can be the same person.
Tasmania. The State Revenue Office says any discretionary trust that has potential foreign beneficiaries is likely to be a foreign trust. A foreign trustee can be an Australian citizen or an Australian company.
ACT. Only a foreign person specifically named in the deed as someone to whom a distribution can be made can hold a controlling interest in a discretionary trust.
Fixed trusts, unit trusts and layers
For fixed and unit trusts the tests are percentages. NSW's example: a unit trust with four equal unitholders, three Australian citizens and one non-resident, is foreign because one person holds 25%, which is above 20%. Revenue NSW also says a single foreign holder of 20% or more can trigger liability even if all the other unitholders are Australian.
Victoria treats a unit trust as absentee if at least one unit holder is an absentee person, and a fixed trust as absentee if any absentee person has a beneficial interest in the land.
Layers matter. NSW traces through successive layers of ownership. If a company holds 30% of the units and a foreign person owns all of that company, the trust is foreign. Victoria looks through chains of trusts in the same way. If a trust's beneficiary is the trustee of another trust, the SRO looks through every trust in the chain, and if a beneficiary of the second trust is absentee then both trusts are absentee.
A worked example from Victoria
The SRO's fixed trust example has two equal beneficiaries, one of them absentee, and land with a taxable value of $1 million. If the trustee has not notified the SRO of the beneficiaries, the trust is assessed at the trust surcharge rate, which is $8,163 at that value. The surcharge is then charged on the half held for the absentee beneficiary: 4% x $500,000 = $20,000. The trustee's total is $8,163 + $20,000 = $28,163.
If the trustee has notified the beneficiaries, the trustee is assessed at the general rate ($4,650) plus the same $20,000, a total of $24,650. The beneficiaries are also assessed as deemed owners, with deductions to avoid double taxation.
Revenue NSW has a different structure: special trusts, including many family and discretionary trusts, do not receive the land tax threshold. A special trust that owns $600,000 of land pays 1.6% x $600,000 = $9,600 in ordinary land tax before any surcharge. Generally, foreign beneficiaries of a fixed trust are individually liable for surcharge land tax rather than the trust.
Amending a trust deed
NSW and Tasmania describe ways a discretionary trust can be changed. They are narrow.
- NSW. Named foreign beneficiaries must be removed from the deed. A general clause that only prevents them receiving distributions is not enough. Any amendment must be irrevocable.
- Tasmania. Where a foreign discretionary trust is amended within 6 months of the first land tax assessment notice that includes the surcharge, so that it is no longer foreign, the trustee can apply in writing for a reassessment and refund, with a dated copy of the amended deed. For duty, the amendment has to occur within 6 months of the transaction.
Revenue NSW notes that amending a trust deed may change how the trust is treated in other respects, and that a variation to a trust can itself attract duty. Victoria says variations to discretionary trusts may trigger duty. The exemptions and refunds guide compares other routes.
Documents the offices ask for
- NSW: the executed and dated trust deed with all amendments, the unit register for unit trusts, and any deed irrevocably excluding foreign beneficiaries.
- Victoria: when the SRO asks a buyer to confirm status for foreign purchaser additional duty, it asks for a signed and dated copy of the trust deed with all amendments, the unit register for unit trusts, and evidence for each individual beneficiary or unit holder. Separately, trustees of absentee trusts that own taxable land on 31 December must notify the SRO by 15 January.
- Providing false or misleading information in NSW can lead to penalties. Revenue NSW states a maximum of 500 penalty units ($55,000) for a first offence.
Keep reading
- Land tax surcharge for foreign owners: every state and territory compared
- Foreign surcharge exemptions and refunds: what each state allows
- NSW land tax surcharge for foreign owners: the 5% rate, who pays and how to claim an exemption
- Absentee owner surcharge in Victoria: who is an absentee owner and what it costs
- Queensland land tax surcharge for foreign owners: absentees, foreign companies and foreign trusts
- Additional foreign acquirer duty in Queensland: who pays the 8% and when
Frequently asked questions
Does an Australian trustee company mean the trust is not foreign?
No. The tests look at who benefits, not who holds legal title. Tasmania notes that a foreign trustee can be an Australian citizen or company, and NSW says to look beyond the immediate purchaser through layers of ownership.
Is a family trust treated as foreign if one potential beneficiary is a foreign person?
In NSW and Tasmania it can be, because potential beneficiaries count for discretionary trusts. In Victoria the test looks at specified beneficiaries named in the deed. In the ACT only a foreign person named in the deed as a possible recipient counts.
Are self-managed super funds exempt?
Not automatically in NSW. Revenue NSW says a superannuation fund is generally treated as a fixed trust, so the 20% and 40% thresholds apply, and if no member is foreign the trustee is generally not foreign.
Can I fix the problem after buying?
The offices describe narrow routes with strict dates. Tasmania allows deed amendments within 6 months for a refund. NSW describes amendments that must be irrevocable and remove named foreign beneficiaries. A lawyer should review the deed first.
Does a small foreign share matter?
It can. NSW treats a trust as foreign where one foreign person holds at least 20%, or foreign persons together hold at least 40%. Queensland and the ACT use 50%. Victoria classes a trust as absentee if at least one beneficiary or unit holder is absentee, and its fixed trust example charges the surcharge on the part held for the absentee beneficiary.
Sources
- Surcharge purchaser duty for trusts, Revenue NSW
- How trusts are assessed for land tax, Revenue NSW
- Understanding absentee trusts, State Revenue Office Victoria
- Absentee discretionary trusts, State Revenue Office Victoria
- Absentee fixed trusts, State Revenue Office Victoria
- Exemptions, concessions and rules for foreign purchaser additional duty, State Revenue Office Victoria
- Land tax threshold and rates for foreign companies and trusts, Queensland Revenue Office
- Definition of foreign, State Revenue Office Tasmania
- Foreign status changes, State Revenue Office Tasmania
- Foreign ownership surcharge, ACT Revenue Office
Checked 5 October 2026.
firbapproval.com.au is an independent guide. It is not affiliated with, endorsed by or connected to the Foreign Investment Review Board, the Australian Treasury or the Australian Taxation Office. We do not lodge or process applications. Applications are made to the ATO. General information only, not legal, tax, migration or financial advice.