NSW Property Trusts Under the Microscope

James Creevy and Mitchell Harding, current as of: 13 March 2026.

It is expected that an increased level of scrutiny will be applied to trusts that hold NSW property. Despite the land-tax deadline being 31 December, it’s essential that advisers keep the implications of holding NSW property in trusts front of mind, for both new and existing clients.

Discretionary Trusts – Surcharges

When it comes to Discretionary Trusts, the trust deed must irrevocably exclude foreign persons to ensure the trust is not subject to surcharge duty (upon acquisition) and land tax (annually). These surcharges are significant and were discussed in a recent article that can be found here. These requirements came about in 2020 so if advisers have clients who hold NSW property, or intend to in the future, those trust deeds should be checked to ensure the relevant provisions are present. If they are not present, an amendment to include the provisions should be considered.

Unit Trusts – Land Tax Free Threshold

Separate to the surcharge issue, access to the NSW land tax-free threshold is only available to trusts in very limited circumstances. Access depends on both the terms of the trust deed and the types of unitholders of said trust. 

For a trust to access the land tax-free threshold of $1,075,000 in NSW, it needs to be considered a fixed trust for NSW land tax purposes.  This involves, amongst other things, ensuring that the trust deed contains the relevant criteria in the legislation.  If a trust is not considered fixed in accordance with the legislation, it will be considered a special trust and will not be able to access the land tax-free threshold. 

Advisors should work with trustees to review and, where necessary, amend trust deeds to make trusts fixed for NSW land tax purposes if access to the land tax-free threshold is sought.

There are also strict requirements in relation to unit holders in order for the land tax free threshold to be met. If a unit holder is a trust that is a “special trust” (same criteria as above), it will be assessed as a secondary tax payer and without the benefit of the threshold – this is explored in-depth in an earlier article that can be found here.

Contact us to ensure your clients’ trusts are properly amended if the need arises.

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.