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Nasty! Vanilla Discretionary Trusts and Foreign Takeovers Rules

Dec 18, 2015

If you have an extended family which includes foreigners, here is a real nasty contained in the Foreign Acquisitions and Takeovers regulatory Structure.

Check out the new example of a foreign person for whom it is a criminal offence to acquire an interest in Australian Residential land without Scott Morrison's approval.

"A discretionary trust is established in Australia and the trustee is an Australian citizen. Four individuals hold a beneficial interest in the trust, as potential beneficiaries of any of the income or property of the trust. One of those individuals is not ordinarily resident in Australia and is not an Australian citizen, and the others are Australian citizens. The individual who is not ordinarily resident in Australia is a foreign person and taken to have a 100 per cent interest in the trust (irrespective of how the trustee may exercise his or her discretion in practice). The trustee of the trust is a foreign person for the purposes of Australia’s foreign investment framework. The trustee therefore needs to apply for and receive approval for any proposed purchase by the trust of residential land."

Category: International Law

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