Details on taxing land held in trusts

New arrangements for the taxation of land held in trusts will start on January 1 next year. The tax will not be retospective. Details about the arrangements are contained in the Duty and Land Tax Acts Bill, currently before State Parliament.

In a media statement, the Treasurer, Mr Brumby, said the changes would affect only a small number of taxpayers, estimated to be less than 2000. He said existing trusts will have the option to be taxed at present rates by nominating a beneficiary. A surcharge of 0.375% would apply to existing trusts if a beneficiary was not nominated, in addition to the standard land tax scale.

An exemption from the surcharge will be available to the following types of trusts:

• Charitable trusts;
• Complying superannuation funds;
• Trusts established under a will, for a period of three years;
• Public unit trusts and wholesale unit trusts;
• Trusts established solely for disable beneficiaries;
• Trusts established solely for beneficiaries of a guardianship or administration order;
• Child maintenance Trusts; and,
• Trusts holding land for members of a club.

Mr Brumby said the combination of the exemptions plus the "nominated beneficiary" option meant that the vast majority of family trusts would be unaffected by the new model. He said revenue would be about $6 million by the fourth year compared with $20 million in the original model.

For more information, visit http://www.sro.vic.gov.au/SRO/srowebsite.nsf/index1.htm?OpenPage&charset=iso-8859-1 which provides a link to the media statement by Mr Brumby as well as a link to the legislation.