Balancing Flexibility and Compliance: Foreign Person Provisions in Acis Trust Deeds

Current as of: 19 June 2026.

In the last decade, foreign person surcharge duty and surcharge land tax have been imposed on trusts (of a discretionary nature, e.g. family trust, hybrid trust) due to the lack of appropriately drafted provisions to exclude foreign persons as beneficiaries and controllers of trusts. As a result of this, trustees have been inadvertently subject to costly surcharges when purchasing or holding real property in all states and territories of Australia (except Northern Territory, to date).

Importance of Foreign Person Surcharges

Provisions which exclude foreign persons are critical, as they directly impact whether a trust of a discretionary nature will be subject to surcharge duty and land tax where it holds Australian property. In some cases, it is not sufficient that a trust does not make distributions to foreign persons in a given year. Revenue authorities instead focus on whether foreign persons are potential beneficiaries under the terms of the trust deed.

Without appropriate exclusions, a trust may be exposed to significant additional taxes, including increased duty on the acquisition of property, and land tax surcharges while holding property.

The current surcharge rates across Australian jurisdictions are summarised below:

State / Territory	Stamp Duty Surcharge	Land Tax Surcharge
New South Wales	9% of the dutiable value of the residential property.	5% of the value of the land
Queensland	8% of the dutiable value of the property	3% of the value of the land
Victoria	8% of the dutiable value of the property	4% of the value of the land
Western Australia	7% of the dutiable value of the property	N/A
South Australia	7% of the dutiable value of the residential property.	N/A
Tasmania	8% of the dutiable value of residential property; 1.5% for primary production property	2% of the value of the land
ACT	Varies for non-commercial conveyances (e.g. residential, primary production, home business)	0.75% of the value of the land
Northern Territory	N/A	N/A

*as at 19 June 2026*

How Acis Deals with Foreign Person Surcharges in our discretionary trust deeds

At Acis, each trust deed of a discretionary nature is drafted with careful consideration of the foreign person surcharges imposed throughout Australia. By default, each deed includes carefully structured foreign person provisions (IMPORTANT NOTE – for all states except NSW – for trusts that hold or intend to hold NSW property, refer to the commentary relating to NSW later in this article) designed to operate only when required, ensuring both compliance and flexibility.

These provisions are intentionally drafted to remain dormant until the trust acquires a direct or indirect interest in property. While the trust does not hold such an interest, foreign persons are not treated as excluded persons. This means they can continue to be potential beneficiaries and may act as Appointor or Trustee.

However, once the trust acquires and holds an interest in property, the provisions automatically take effect. At that point, foreign persons become excluded persons for the duration of the ownership period. This results in foreign persons no longer being potential beneficiaries, automatically ceasing any roles as Appointor or Trustee, and being prevented from appointment to those positions while the property interest is held, whether directly or indirectly.

Importantly, this mechanism is not permanent. If the trust subsequently disposes of the property, the exclusion provisions cease to apply. Foreign persons may then once again be appointed as Appointor or Trustee and resume their status as potential beneficiaries. This approach preserves flexibility while ensuring compliance during relevant periods.

These provisions are designed to prevent inadvertent exposure to foreign person surcharge duty and land tax in all Australian jurisdictions except New South Wales. In most states and territories, this “when applicable” exclusion approach is sufficient to ensure the trust is not classified as a foreign trust when acquiring or holding property.

New South Wales Foreign Person Surcharges

Critically, New South Wales has stricter requirements than the rest of Australia. Per the relevant NSW duty and land tax legislation, Revenue NSW requires that the deed for a trust of a discretionary nature contains foreign person exclusions that are irrevocable in order to avoid surcharge duty and land tax surcharges. As a result a more tailored approach is required where NSW property may be involved.

The Acis Approach: NSW Foreign Person Exclusion

When ordering a trust of a discretionary nature from Acis, it is asked:

Does the trust intend to acquire residential property in New South Wales? 

If the above question is answered yes, a second question is asked:

Does the trust wish to irrevocably exclude foreign persons?

Where both answers are “yes”, additional provisions are included to irrevocably* exclude foreign persons, regardless of whether the trust holds property in NSW at a given time. 

On request at the time of ordering, any form of foreign person exclusion can be removed from an Acis trust deed so that a foreign person can be a controller or potential beneficiary of a trust. However, this does mean that the trust would be subject to surcharge duty and land tax if it acquires and/or holds a direct or indirect interest in property within Australia.

Balancing Compliance with Flexibility

Foreign person surcharges add a layer of complexity to trust structuring, particularly where property investment is involved. A well-drafted trust deed must not only address these surcharges, but do so in a way that preserves flexibility for changing circumstances. The Acis approach strikes that balance by embedding provisions that respond automatically when required, while avoiding unnecessary restrictions when they are not*. By tailoring the drafting to both the relevant jurisdiction and the client’s intentions, we help ensure that trusts remain compliant, efficient, and fit for purpose over the long term.

*Note the inclusion of the foreign person exclusion that covers NSW property is irrevocable and cannot ever be removed, as required by the relevant NSW duty and land tax legislation.

Acis does not provide advice in relation to commercial law, taxation, duty, company law or any other matter. We do not purport to provide advice nor should you construe anything in any correspondence with us, or material provided by us, as advice of any kind.