From 1 March 2020, the State Revenue Office (SRO) in Victoria has introduced an additional 8% stamp duty on the purchase of residential property by a discretionary trust. This duty will also apply to a residential property purchase by a unit trust or company that is owned or controlled by a discretionary trust.
The definition of residential property under the Duties Act 2000 in Victoria is very broad and includes land intended to be developed into residential property.
The additional stamp duty will apply where the SRO determines your trust is a “foreign” trust. From 1 March 2020, the SRO will deem all discretionary trusts to be “foreign” trusts unless the trust deed specifically excludes foreign persons/entities from its beneficiaries.
We strongly suggest you obtain legal advice prior to acquiring/signing a contract to acquire residential property. This legal advice should include a review of your trust deed and an amendment to its beneficiaries (if required) to avoid this additional stamp duty in Victoria.