The accountant ordered a template trust deed. He saw clauses about foreign persons and assumed it was compliant. It was not.
That assumption just cost the trust surcharge land tax at 4%.
Verona Hill Holdings Pty Ltd ATF Roveto Family Trust v Chief Commissioner of State Revenue [2026] NSWCATAD 69 (P Decle SM, 11 March 2026).
The Facts
A discretionary trust was set up in December 2022 to hold residential property in NSW. The accountant ordered a template deed from ACIS. The order form asked: does the trust intend to acquire residential property in NSW? Should it irrevocably exclude foreign persons? Both marked “No” - by administrative error [24].
When the deed arrived, the accountant “observed clauses dealing with foreign persons and assumed that it was compliant for NSW land tax purposes” [25]. He was “unaware of the requirement for discretionary trusts owning residential land in NSW to have specific provisions that are different to other states” [25].
The deed excluded foreign persons under QLD, VIC, TAS, WA and ACT legislation. Not NSW. A catch-all captured foreign persons under “any other statute” - but with a temporal condition: “but only while” the trust holds real property.
How the Trust Failed
Section 5D requires two things: no foreign person can be a potential beneficiary, and the deed cannot be capable of amendment to allow one.
The “but only while” condition meant foreign persons were excluded only while the trust held real property. Once sold, a foreign person could become a beneficiary and receive the proceeds [85]. That fails the no foreign beneficiary requirement. The Tribunal indicated that even if wrong on that point, the trust would also have failed the no amendment requirement for the same reasons as Grima [2025] NSWCATAD 149 [91].
The trustee tried to fix it. A Deed of Ratification and Amendment was executed in September 2024, backdated to the trust's creation. Revenue NSW accepted it going forward. Not backwards [30]. A deed of rectification cannot bind the Commissioner - it is evidence only [49]-[54]. The severance clause did not help. Subjective intention was irrelevant [38].
The Takeaway
The accountant saw foreign person clauses and assumed they worked. He did not know NSW has specific requirements that differ from other states. A template deed reviewed without specialist knowledge produced a trust non-compliant from day one. The retrospective fix did not work.
If your client's discretionary trust holds residential land in NSW, the foreign person exclusion clauses need to be checked by a lawyer who understands the interaction between the deed and s 5D. Template deeds do not automatically get this right. This case proves it.
General information only. This note was written as at 11 March 2026 and the law may have changed since. 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.