Last reviewed: October 2026
How you hold Australian property affects almost everything that follows: the stamp duty you pay, the land tax you pay every year, the tax on rent and on sale, what happens when you die, and whether the property is exposed if a family member separates or is sued. For overseas families, there is an extra trap. A structure that is efficient for Australians can attract heavy foreign surcharges if it is not drafted with foreign family members in mind.
The three main options
| Structure | Main advantages | Main drawbacks for foreign families |
|---|
| Personal name | Simple and cheap to set up; easy to finance | Exposed to personal claims; needs probate on death; no flexibility on who receives income |
| Company | Separates ownership from individuals; shares can be transferred | No capital gains tax discount; a foreign-controlled company pays foreign surcharges; extra annual compliance |
| Discretionary (family) trust | Flexibility in distributing income and capital; continues after death without probate; asset protection | Can be treated as “foreign” if any foreign beneficiary could benefit; complex rules on distributions to non-residents |
The foreign trust trap
Most Australian states impose a foreign purchaser stamp duty surcharge and an annual land tax surcharge on foreign owners. In 2026 these are:
Victoria: 8% additional duty on purchase, and a 4% absentee owner surcharge on land tax each year.
New South Wales: 9% surcharge purchaser duty, and a 5% surcharge land tax each year.
Other states: surcharges also apply in Queensland, Western Australia, South Australia and Tasmania, at varying rates.
A discretionary trust can be treated as a foreign trust — and pay these surcharges — simply because its deed allows the trustee to distribute to a foreign person. In Victoria, an older family trust with a broad class of beneficiaries, including relatives living in Singapore or Kuala Lumpur, may be caught even if no foreign family member has ever received a cent.
Where the family’s intended beneficiaries are Australian, a well-drafted deed can permanently exclude foreign persons and avoid the surcharges. Where the beneficiaries are mainly overseas, the surcharges are often unavoidable, and the question becomes whether the other benefits of a trust still justify it.
A trust or company with foreign interests can also be a “foreign person” for federal foreign investment purposes, so FIRB approval may be needed even when the trustee is an Australian company.
Tax across borders
Singapore, Malaysia and Indonesia each have a tax treaty with Australia, but none removes Australian tax on Australian land. Key points:
Rent from Australian property is taxed in Australia, whoever owns it.
Non-residents generally cannot claim the 50% capital gains tax discount on gains accruing while they are non-resident, and cannot claim the main residence exemption.
When a foreign resident sells, the buyer must withhold 15% of the price unless a clearance certificate applies.
Distributions from an Australian trust to non-resident beneficiaries are subject to withholding.
We work with the family’s accountants in Australia and overseas so the legal structure is designed with the tax outcome in view.
Asset protection and succession
A trust or company can protect property from a family member’s creditors and keep it out of probate. But protection has limits. Australian family courts can treat trust assets as property of a spouse who controls the trust, and transfers made to defeat creditors can be reversed. The control provisions of the trust — who can appoint and remove the trustee — are often more important than the trust itself.
Restructuring an existing holding
Moving property from a personal name into a trust or company is usually a new purchase for duty purposes, and may trigger capital gains tax and require new FIRB approval. Restructure only after advice on the full cost.
Frequently asked questions
My family trust has relatives in Malaysia as possible beneficiaries. Will Victoria treat it as foreign? Possibly. It depends on the deed. Many deeds can be amended to exclude foreign beneficiaries, if the trustee has the power and there are no adverse tax effects.
Is a company better than a trust for a Singapore investor? Neither is better in every case. It depends on who will benefit, how long you will hold the property, and the tax position in both countries.
Does holding property in a trust avoid probate? Yes, for the trust property, but control of the trust must pass correctly under the deed.
Contact us. Before you buy or restructure, book an initial consultation and we will review the structure with your advisers.
Related reading: FIRB approval guide (read the guide); Family business succession (read the guide).
This article is general information only and is not legal or tax advice. Rates are as at October 2026 and change regularly.
Sources: Maddocks — Victorian property taxation guide · Revenue NSW 2024–25 Budget measures · Hall & Wilcox on foreign surcharges and trust deeds
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice.
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