We previously talked about how the SA land tax changes have had significant impacts on trusts (particularly discretionary trusts) that own land.
Those changes meant that trusts saw a substantial increase in their land tax bill from 1 July 2020, unless they nominated one of the trust’s beneficiaries to be a designated beneficiary for the purposes of these changes.
A designated beneficiary will generally need to be an individual who was a beneficiary of the trust as of October 2019, and who is over the age of 18 years old. That person will generally be deemed by the SA land tax rules to be the owner of that land (and pay the ‘normal’ rates).
It is common for discretionary trusts to include a long list of eligible beneficiaries defined around a primary or specific beneficiary (usually including the spouse, children, siblings or parents of that person).
People have been asking us that, if they nominate one of their retired parents to be a designated beneficiary – will that affect their entitlement to the aged pension? This may also be the case where you want to appoint a family member who receives the disability support pension. Their concerns are because those pensions are generally subject to an asset test (as well as an income test), and whether making their family member a designated beneficiary will be seen by Centrelink as meaning they now have property in the trust land.
Our view is that making your retired parent (or other family member who receives a pension) a designated beneficiary for SA land tax purposes will not affect their pension entitlements. This is because the changes, set out in section 13A(9)(a) of the Land Tax Act 1936 (SA), make clear the nomination is only for the purposes of the Act, and not for other laws.
If you have any questions about who you should nominate as a designated beneficiary for your trust, or need help notifying RevenueSA within the deadline, call us on 1300 654 590 or email us.
The information contained in this post is current at date of editing – 1 June 2023.
