My client wants to set up a discretionary trust that will exclude foreign beneficiaries and then, down the track, vary the deed to include foreign beneficiaries in the future. Can this be done?
If a discretionary trust is established using our “foreign exclusion” trust deed, then it should not subsequently be varied so as to include foreign beneficiaries.
We say this because a subsequent amendment to include foreign beneficiaries may constitute a resettlement, which could have serious capital gains tax and stamp duty implications.
We understand that the State Revenue Office (SRO) may grant an exemption from the stamp duty surcharge and land tax surcharge to a trust using our foreign exclusion trust deed on the basis that the trust will never have any foreign beneficiaries. Therefore, if the trust deed was subsequently amended so as to include foreign beneficiaries, the SRO may then seek to impose penalties (and there is also the risk of resettlement, as stated above).