Many private trusts administered in Singapore and Hong Kong have an Australian dimension. The trust owns a Melbourne property through an underlying company. A beneficiary has moved to Sydney. The settlor has retired to the Gold Coast. Each of these brings Australian rules into a structure that was designed elsewhere, often after the trust was established.
Issues trustees meet
- Foreign surcharges on property. Victoria and other states impose additional stamp duty and land tax on foreign persons, which can include trusts with foreign beneficiaries. Whether a trust is caught depends on its deed and its beneficiaries, and some trusts have changed their deeds to manage this. Foreign investment approval may also be required.
- Australian-resident beneficiaries. Distributions from a foreign trust to an Australian resident can be taxed in Australia, sometimes including accumulated income from earlier years, with interest charges. Trustees need to know which beneficiaries have become Australian residents.
- A settlor who dies in Australia. Australian family members may question whether trust assets belong to the estate, or whether the trust was really the settlor’s alter ego. The answer will be tested against the deed and how the trust was actually run.
- Protectors and enforcers in Australia, whose powers and duties may be examined by an Australian court.
- Family disputes reaching the trustee. Beneficiaries in Australia asking for information, challenging distributions or threatening proceedings here.
How we help trustees
- Australian advice on property holdings, surcharge exposure and the effect of beneficiaries’ residency, working with your tax advisers.
- Acting in Australian estates where the settlor or a beneficiary has died, and coordinating with you on what the trust does and does not hold.
- Managing communication with Australian-based family members, in English, Mandarin or Cantonese, to reduce the risk of litigation.
- Representing trustees, protectors or beneficiaries in Australian disputes, and mediating where possible.
Why us
We understand the trustee’s position. You owe duties to all beneficiaries, you need to keep proper records, and a family argument in another country does not change that. We aim to give you clear Australian answers that fit your own regulatory framework.
Frequently asked questions
Do foreign trusts pay extra stamp duty on Australian property?
They can. Victoria and other states impose additional stamp duty and land tax on foreign persons, which can include trusts with foreign beneficiaries. Whether a particular trust is caught depends on its deed and its beneficiaries, and some trusts have changed their deeds to manage this. Foreign investment approval may also be required.
Are distributions from a foreign trust taxed in Australia?
They can be. Distributions from a foreign trust to an Australian-resident beneficiary can be taxed in Australia, sometimes including accumulated income from earlier years, with interest charges. Trustees therefore need to know which beneficiaries have become Australian residents and should take tax advice before making distributions to them.
Can Australian family members claim offshore trust assets when the settlor dies?
They may try. When a settlor dies in Australia, family members may question whether trust assets belong to the estate, or argue that the trust was really the settlor’s alter ego. The answer is tested against the trust deed and how the trust was actually run, which is why proper records matter.
Can an Australian court examine the role of a trust protector?
It may. Where protectors or enforcers are in Australia, their powers and duties may be examined by an Australian court, particularly if beneficiaries in Australia challenge distributions or bring proceedings here. Trustees and protectors should understand that exposure early and keep clear records of their decisions.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice. Victorian law unless stated otherwise.
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