Your client’s family trust has owned NSW residential property since 2003. The trust was set up in 2002. A standard discretionary trust, nothing unusual.
Then in 2021, the Chief Commissioner issues surcharge land tax assessments. Not just for 2021, but from 2017. Nine years of surcharge at rates of up to 5%.
The trust deed never excluded foreign beneficiaries.
SN Casey v Chief Commissioner of State Revenue [2026] NSWCATAD 105
What happened
The Casey Family Trust was established in 2002 as a discretionary trust. SN Casey Pty Ltd has been trustee since establishment. In 2003, the trustee acquired residential land in NSW.
In February 2021, the Chief Commissioner assessed surcharge land tax for 2021 and reassessed for 2017-2020. Further assessments followed for 2022-2025 [10]. The trust deed was not amended to exclude foreign persons until 30 May 2025 [12].
The Applicant objected, arguing the assessments were unfair. They did not know about the change of law, had limited resources to track it and the liability left them in a dire financial position [30]. An act of grace payment was made for certain interest but not the surcharge itself [13].
The Tribunal’s findings
Under s 5D of the Land Tax Act 1956, the trustee of a discretionary trust is taken to be a “foreign person” unless the trust prevents foreign persons from being beneficiaries per s 5D(3). The Casey Family Trust did not contain those provisions at the relevant times. The assessments stood [28-29].
On unfairness, the Tribunal applied Commissioner of Taxation v Ryan (2000) 201 CLR 109 [31]. Appeals to general notions of fairness cannot override legislative provisions. The Tribunal had no power to set aside the assessments on that basis [33].
On interest, the Tribunal rejected the Commissioner’s submission that interest on assessment notices had not been formally “assessed”. The notices complied with s 15 of the Taxation Administration Act 1996 and evidenced assessments of interest [44-45]. The act of grace payment covered this amount [47].
On act of grace payments, the Government Sector Finance Act 2018 is not a “taxation law” under the Administration Act. The Tribunal had no jurisdiction to review the refusal of an act of grace payment for the surcharge [53, 56].
The practitioner takeaway
A trap that has caught many family trusts. The NSW foreign person surcharge has applied since 2017. If your client’s discretionary trust owns NSW residential land and the deed does not prevent foreign persons from being beneficiaries per s 5D(3), the trustee is deemed a foreign person. The surcharge was 2% for 2018 to 2022 and 4% for 2023 and 2024. It is 5% from the 2025 land tax year.
Unfairness is not a defence. Not knowing the law changed is not a defence. The only fix is amending the deed and that only works prospectively.
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.