Re Dion Investments Pty Limited [2020] NSWSC 1661

“Can I just pay the Australian beneficiaries?”

___

In 1973 a trust was settled. The corpus included residential property: [3]

Changes to the Land Tax Act and Duties Act mean surcharge tax won’t be charged if a trust whose corpus includes residential property has no potential or existing foreign beneficiaries: [7] - [9]

i.e. Foreign beneficiaries mean a bigger tax bill.

The trustee asked the Court for judicial advice (s63) and for orders (s81) releasing it from having to pay foreign benefs.

There were 3 bits to the Court’s s63 response.

1. The trustee would not be justified surrendering the foreign benef trusts as the trust deed gives no power to do that: [14], [18]

2. Possibility of “issue” class benefs in future means potential for further foreign benefs in future, meaning tax requirements not satisfied: [27]

3. Power to revoke trusts granted to certain people by the trust deed does not pass on to their executors: [32]

However, s81 allows the Court to grant trustees power to undertake transactions which are expedient for the trust: [34]

The tax advantage (to the tune of $100K per year) was expedient: [41]

Using s81, the Court granted the trustee the power to surrender trusts which might benefit a foreign person, and so take the tax advantage: [43]

Please consider following me on IG: https://www.instagram.com/coffeeandacasenote/