Land Tax: 31 December Deadline

James Creevy and Mitchell Harding, current as of: 10 November 2025.

With the end of the year fast approaching, trustees and their advisers should review their trust structures that hold property in New South Wales, Victoria and ACT ahead of the 31 December land tax assessment date. Early action helps manage risk and avoid unnecessary tax exposure, particularly in relation to foreign person surcharge land tax in each of those three states, and specific to Unit Trusts that hold property in NSW, the land tax-free threshold.

Surcharge Foreign Person Land Tax for Discretionary Trusts

For the 2025/26 land tax year, 

• NSW applies a 5% surcharge;
• Victoria applies a surcharge starting at 4%;
• ACT applies a surcharge of 0.75%;

on the taxable value of residential land that is deemed to be owned by foreign persons, in addition to the general land tax rate. Trustees of discretionary trusts, by default, will be considered to be foreign and liable to pay the surcharge, unless the trust deed excludes foreign persons as potential beneficiaries. Significantly, NSW takes it a step further and requires that any exclusion of foreign persons contain an irrevocable element – a feature of the law that only came about in 2020. Therefore, it is essential that advisers check their client’s trust deeds to ensure they have an up to date foreign person exclusion as the one the trust deed currently contains (if any) may pre-date 2020 and be insufficient to ensure surcharges are not applied.

If an amendment is required, Acis can assist – but any amendment must be executed before midnight on 31 December and as a result, advisers should be acting immediately to ensure their trust clients are not subject to hefty land tax surcharges.

Unit Trusts Accessing the Land Tax-Free Threshold in NSW

Particular to NSW, we have seen a noticeable increase in trusts being classified as special trusts and being assessed for land tax without the benefit of the land tax free threshold. To access the land tax-free threshold of $1,075,000 (for the 2025 year onwards), a trust must qualify as a fixed trust for NSW land tax purposes.

In practice, this means the trust deed must satisfy the requirements set out in section 3A of the Land Tax Management Act 1956 (NSW). If those criteria are not met, the trust will be treated as a special trust and will not be entitled to the threshold.

Advisers should, assuming access to the land tax-free threshold is sought:

• Work with trustees to review trust deeds to identify whether they would meet the relevant criteria and be deemed a fixed trust for Revenue NSW purposes; and
• If the relevant criteria are not met, amend the trust deed to make the trust fixed for NSW land tax purposes.

The amendments should be done and submitted to Revenue NSW, well in advance of the land tax date of 31 December. Acis can assist with these types of amendments to existing unit trusts but they are extensive and do take time so it’s important to act now and check your clients trust deeds to determine if an amendment is required.

Pitfall: Unit Holders That Have A Discretionary Element

Importantly, even where a Unit Trust complies with section 3A of the Land Tax Management Act 1956 (NSW) and is therefore deemed eligible to access the land tax-free threshold as a primary taxpayer, if there are Unit Holders (i.e. secondary taxpayers) that aren’t:

– an individual;

– a company; 

– a super fund; or

– another trust that is fixed for NSW land tax purposes;

those particular Unit Holders will not get the benefit of the land tax free threshold. The most common example of a Unit Holder that will not get the benefit of the land tax free threshold is a discretionary trust.

Primary and Secondary Taxpayers Example

To illustrate, consider a client who orders a unit trust through Acis that qualifies as a fixed trust for NSW land tax purposes, with units held 50/50 by an individual and a discretionary trust.

The unit trust they have ordered is fit for purpose and will be able to access the land tax-free threshold should the trust acquire NSW property as a primary taxpayer. However, Revenue NSW will also look at the equitable owners of the Trust (i.e. the Unit Holders) to identify whether, as secondary taxpayers, they should also be able to access the land tax-free threshold. If the equitable owners are assessed as special trusts (i.e. not fixed for NSW land tax purposes), then they will not receive the benefit of the land tax-free threshold on the relevant proportion of units that they hold.

Applying this to the scenario above, the equitable owners would be the individual and the discretionary trust. As an individual is not deemed to be a special trust, they will receive the benefit of the land tax-free threshold on their relevant proportion of units held (50%). The discretionary trust on the other hand, would be deemed a special trust and would not receive the benefit of the land tax-free threshold on their relevant proportion of the units held. 

This is vital to understand as an adviser or trustee to ensure appropriate structuring is in place come 31 December.

How Acis can help with these two critical issues 

1. Foreign Person Surcharges (Nationwide)

Acis can assist with amending discretionary trust deeds to exclude foreign persons from being able to benefit from the trust for the purpose of not being subject to surcharge land tax and duty, and in the case of NSW, irrevocably exclude foreign persons. Please note, this amendment will also mean such foreign persons will be excluded from being able to be a Trustee and Appointor of the Trust. 

2. Accessing The Land Tax Free Threshold in NSW

Acis is also able to amend unit trusts that are not fixed for NSW land tax purposes to ensure that the trust is considered a fixed trust and gain access to the benefit of the land tax-free threshold as a primary taxpayer. As mentioned though, if a Unit Holder is deemed to be a special trust by being any other type of trust that is not specifically fixed for NSW land tax purposes (i.e. discretionary trust, or even a trust that is fixed but does not contain the requisite elements to comply with section 3A of the Land Tax Management Act 1956 (NSW)), there may still be tax implications despite preparing this amendment.

Acting now is essential to ensure any amendment can be completed and executed by trust clients in the lead up to 31 December. Contact us today to ensure your clients’ trusts are properly amended and compliant before the deadline.

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.