14 December 2022 – see full letter Here.
Excerpt:
…Based on the above, and on the plain reading of the provisions, I am satisfied that the application of section 16C(1)(b)(ii) is limited to circumstances where a non-foreign person (other than a natural person) becomes a foreign person on or after 1 July 2022.
On that basis, there is no requirement for a discretionary trust which was foreign immediately prior to 1 July 2022 to have its trust deed amended so as to avoid FILTS in respect to land acquired prior to 1 July 2022. However, land acquired by that trust on or after 1 July 2022 (or further interests in land for which the trust held an interest prior to 1 July 2022) would attract FILTS.
A discretionary trust will be considered to have become a foreign person if, for example, immediately prior to 1 July 2022 foreign persons did not have a beneficial interest in 50 per cent of the capital of the trust, but at some point on or after 1 July 2022 foreign persons obtained a beneficial interest in 50 per cent or more of the capital of the trust. That said, as set out above, it is expected that a trust or company becoming foreign on or after 1 July 2022 is more likely to result from foreign persons acquiring majority interests in unit trusts or companies rather than changes in discretionary trust objects/beneficiaries3.
Where a company or a trust does become foreign on or after 1 July 2022, all relevant land (residential type land with a general land classification) owned by the company or trust would become subject to FILTS, regardless of whether the company or trust acquired the land before or after 1 July 2022.
I take on board your comments relating to the FILTS guideline, and I will undertake to review…. (read more Here)