Land Tax - I'm confussed!

[skater]

I just opened a lovely little letter for the OSR concerning my land tax for 2007 telling me it will now be calculated on an average value of the last couple of years. On the back of the letter there is a couple of paragraphs on Trusts. This is where it gets confusing. Copied below:

Trusts

A decision of the High Court of Australia on 28 September 2005, concerning the taxing of unit trusts under the Victorian Land Tax Act 1958, ruled that holders of units in a Victorian unit trust are not the owners of the land held by the trust.

As a result of this decision, from the 2006 tax year, nearly all unit trusts in NSW are liable to be assessed as 'special trusts' under section 3A of the NSW Land Tax Management Act 1956. Special trusts are assessed at the rate of 1.7 per cent on the combined taxable value of the land and ae not entitled to receive the threshold of $352 000.

Concessions have been introduced to allow unit trusts to be assessed as fixed trusts for the 2006 and subsequent tax years provided certain criteria are met. Download the Unit Trusts factsheet lising all the criteria at www.osr.nsw.gov.au

Now, when I go to the website I cannot find any factsheet concerning trusts of any sort. I even put Unit Trusts into their search function & still couldn't find anything.

Does this mean that a trust will now get the threshold?

I have a discretionary family trust (not a unit trust) so how will this affect me?

Would really appreciate any views from the wonderful accountants we have on the forum.

 

[jrc]

From the FAQ section of the OSR

How is a trust defined for land tax purposes? What rates apply?
For land tax purposes, trusts are divided into five categories:
fixed trusts
concessional trusts
superannuation trusts
special trusts
unit trusts.
A fixed trust is a trust where the beneficiaries are considered to be owners of the land at the taxing date of midnight on 31 December prior to the tax year. Land tax in 2007 is calculated at 1.7 per cent on the combined value of the taxable land owned above the land tax threshold plus $100.

A concessional trust is a trust where the land in the trust is held for the benefit of a person who is:

under 18 years of age, or
subject to a guardianship order under the Guardianship Act 1987; or
in the 'target group' under the Disability Services Act 1993 (NSW)
Land tax for concessional trusts in 2006 is calculated at 1.7 per cent on the combined value of the taxable land owned above the land tax threshold plus $100.

A superannuation trust which is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust under Sections 42, 43 & 44 respectively of the Superannuation Industry (Supervision) Act 1993 of the Commonwealth is calculated in 2006 at 1.7 per cent on the combined value of the taxable land owned above the land tax threshold plus $100. If a superannuation trust is not a complying or pooled trust and is not a fixed trust, it is a special trust.

A special trust is a trust where the trustee is the only person who meets the definition of ‘owner’ for land tax purposes and the beneficiaries are not considered to be owners. If a trust does not meet one of the previous trust definitions, it is a special trust. Examples of special trusts include most family trusts and discretionary trusts. The land tax threshold does not apply to special trusts which, in 2007, are taxed at a flat rate of 1.7 per cent.

A unit trust is a trust in which the unit holders are entitled, under the trust deed, to a fixed proportion of any distribution of income (income units) or capital (capital units) or both income and capital. Generally unit trusts are special trusts. From 2006, 'family-held unit trusts' may be assessed as fixed trusts after completing a 'unit trust declaration form'. Other unit trusts may undertake to restructure the trust deed so as to be then classified as a fixed trust.


Looks like your discretioanry trust is a special trust, so no land tax threshold will aplly

 

[skater]

Hmmm..........I don't know where you found that, but that was exactly what I was after. Thankyou. Although I would prefer my discretionary trust was classified as a fixed trust.