Special Trust Land Tax: NSW and Victoria Rates and Surcharges

Land held in a discretionary or family trust is taxed harder than land held in your own name in every Australian state. New South Wales calls these structures “special trusts” and applies land tax from the first dollar of land value at a flat 1.6 percent, with no tax-free threshold.¹ Victoria layers a separate trust surcharge on top of general land tax rates, starting at just $25,000 of land value.² For a trust holding a single investment property, the difference against individual ownership can run to thousands of dollars a year, and the gap widens as land values rise.

What Makes a Trust a Special Trust

The term comes from NSW law, but every state has an equivalent category, and the trigger is the same everywhere: beneficiaries do not hold a fixed, measurable interest in the trust’s land. In a typical discretionary or family trust, the trustee decides who gets income or capital and how much. No beneficiary can point to a set percentage of the property and call it theirs. That discretion is exactly why the harsher treatment applies, because the revenue office cannot attribute the land to any identifiable owner.

Fixed trusts and unit trusts sit outside this regime. In a fixed trust, each beneficiary holds a defined share; in a unit trust, units function like shares in a company. Because the revenue authority can trace who owns what, these trusts are generally assessed at standard rates.³ In South Australia, trustees of fixed trusts can choose to notify RevenueSA of all beneficial interests and have the land taxed at general rates. Discretionary trusts get no such choice.

Classification turns on the trust deed itself, not on how the trustee has actually behaved. If the deed lets the trustee accumulate income, vary distributions, or add and remove beneficiaries, the trust is discretionary. A trust that has paid the same beneficiary for twenty years is still discretionary if the deed says the trustee could have picked someone else.

What It Costs in New South Wales

An individual landowner in NSW pays no land tax until their total taxable land value exceeds $1,075,000 for the 2026 land tax year.⁴ A special trust gets no threshold at all. Tax starts immediately at 1.6 percent of the total land value and rises to 2 percent once the total passes $6,571,000.¹

Run the numbers on a single investment property with a land value of $800,000. In an individual’s name, the annual land tax is zero. Held by a special trust, the same property attracts $12,800 in land tax each year. That gap doesn’t close. It grows with every valuation increase.

Land tax is calculated on unimproved land value only. Buildings, renovations, and landscaping are excluded. The figure comes from the Valuer General and is reassessed periodically.

What It Costs in Victoria

Victoria takes a different route. Instead of a flat rate, it stacks a trust surcharge on top of the general land tax rates that apply to any owner. The surcharge starts at $25,000 of land value, well below the $50,000 threshold where general land tax begins for a natural person. At $1,000,000 of land value, the trust surcharge alone adds $8,163, calculated as $8,163 plus 1.275 percent of the amount above $1,000,000 for higher values.² Above $3,000,000, the surcharge reaches $31,650 plus 2.65 percent of the excess.

The surcharge is paid in addition to general land tax, not in place of it. So a Victorian discretionary trust holding $1,000,000 in land pays the general-rate assessment plus the $8,163 surcharge on top. The combined bill is well above what a natural person would owe on the same land.

The Family Home Trap

One of the most costly surprises is the loss of the principal place of residence exemption. When you own your home directly, no state charges land tax on it. Move that house into a family trust and the exemption typically disappears. In NSW, a special trust holding the family home pays 1.6 percent on the land value with no threshold and no residence exemption.¹

Victoria offers a partial workaround. If a beneficiary of a discretionary trust genuinely lives in the property as their principal place of residence, the trustee can nominate that person as the PPR beneficiary. While the nomination is in force, the trust is assessed under general land tax rates and the trust surcharge does not apply.⁵ The nomination covers one property only; the trust still faces the surcharge on any other land it holds.

Families who set up trusts for asset protection or estate planning often discover this cost years later. If your home sits inside a discretionary trust, you are almost certainly paying land tax you wouldn’t owe if the property were in your personal name.

How to Reduce the Bill

In Victoria, the PPR beneficiary nomination is the most effective lever. The trustee submits form LTX-Trust-19 through the State Revenue Office and the trust is then assessed at general rates rather than under the surcharge schedule.⁵ A few constraints matter:

Each trust can nominate only one PPR beneficiary, regardless of how many properties it holds.
The nominated beneficiary must actually live in the property. Entitlement to occupy is not enough.
If the beneficiary moves out or dies, the trustee must notify the State Revenue Office within one month and may nominate a replacement.

A trust with a valid PPR nomination also gets a concessional assessment: each separate property is assessed as if it were the only land the trustee owned, rather than being aggregated with other trust land.⁵ For a trust holding several properties, that de-aggregation can be worth more than the surcharge removal itself.

In South Australia, trustees of fixed trusts can notify RevenueSA of all beneficial interests to access general rates. But the notification is close to permanent: only the trustee can request withdrawal, and once withdrawn, no further notification can be lodged.³ Notify without weighing the long-term consequences and you cannot undo the decision.

Foreign and Absentee Beneficiary Surcharges

If any beneficiary is foreign or non-resident, a further layer of tax applies on top of everything else. Victoria charges a 4 percent absentee owner surcharge on the taxable land value, applied above both the general rates and the trust surcharge.⁶ A discretionary trust with absentee beneficiaries is treated as an absentee trust, and the entire landholding can be subject to the surcharge unless every absentee beneficiary qualifies for an exemption.

Queensland applies a 3 percent foreign surcharge on taxable land valued at $350,000 or more, on top of the regular trust rates. A trust is classified as foreign where at least 50 percent of the trust interests are held by non-citizens who are not permanent residents, foreign companies, or trustees of other foreign trusts. For discretionary trusts, only the interests of “takers in default” count toward that 50 percent threshold.⁷

Trustees who haven’t reviewed their beneficiary list since the trust was drafted sometimes find out about this liability years too late, when a beneficiary has moved overseas or changed residency status without anyone updating the trust.

Aggregation Across Properties and Trusts

Land tax is calculated on the total taxable value of all land a trust holds within a state, not property by property. A trust with three properties worth $400,000, $350,000, and $250,000 is assessed on the combined $1,000,000. Because rates are progressive, aggregation pushes the total into higher brackets faster than separate assessments would.

Queensland goes further. Where the same trustee runs multiple trusts with identical beneficiaries holding identical interests, the land across all those trusts is combined into a single assessment.⁸ Splitting properties across a fleet of trusts with the same family members as beneficiaries does not multiply the threshold. Where each trust has a genuinely different beneficiary group, separate assessments apply.

Notification Deadlines and Late Penalties

Trustees must notify the state revenue office when they acquire land on trust. In Victoria, the deadline is one month from acquisition. Two forms are required: a Notice of Acquisition of an Interest in Land (LTX-Form-01) lodged with Land Use Victoria, and a Notice of Trust Acquisition of an Interest in Land (LTX-Trust-08) lodged with the State Revenue Office.⁵

The same one-month window applies when other things change: the trust type shifts, beneficial interests are added or removed, a PPR beneficiary moves out or dies, or the trust sells a property. Absentee beneficiary status must be notified by 15 January of the year following the relevant land tax year. From 1 January 2026, Victorian trustees must also notify the State Revenue Office when they stop holding land in a trustee capacity even if the title itself doesn’t change.⁵

In NSW, trustees lodge annual returns through Land Tax Online by 31 March or by the due date shown on their assessment notice.⁹

Missing a deadline is expensive. Victoria charges penalty tax calculated on the additional amount that would have been assessed had the trustee notified on time, plus interest.⁵ Revenue offices can also issue retrospective assessments reaching back to the date of acquisition. Where a trust has held land for years without notifying, the back taxes, penalties, and compounding interest can easily outweigh what timely payment would have cost. If you have inherited responsibility for an existing trust, check its land tax history before the arrears compound further.

1
Revenue NSW. How Trusts Are Assessed for Land Tax
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State Revenue Office Victoria. Land Tax Current Rates
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RevenueSA. Taxing Trusts – Fixed Trusts
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Revenue NSW. Preparing for the 2026 Land Tax Year
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State Revenue Office Victoria. Trusts and Land Tax
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State Revenue Office Victoria. Understanding the Absentee Owner Surcharge
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Queensland Revenue Office. Land Tax Rates for Foreign Companies and Trusts
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Queensland Revenue Office. Land Tax Rates for Companies and Trusts
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Revenue NSW. How to Use Land Tax Online