The only unit trust approved by the NSW Office of State Revenue as a fixed trust — giving property investors the flexibility and protection of a trust structure at the same land tax cost as owning in your own name. Save up to $17,200 every year.
Most unit trusts, discretionary trusts and hybrid trusts are classified as “special trusts” for NSW land tax purposes. Land held by a special trust attracts a flat 1.6% rate on every dollar of land value — with no threshold deduction. On a property with a $1,075,000 land value at the threshold, a standard trust pays $17,200 in annual land tax — versus nil if owned as a fixed trust.
The MGS NSW Land Tax Unit Trust solves this problem. Macquarie Group Services has obtained approval from the NSW Office of State Revenue for this trust to be classified as a fixed trust under section 3A(3B) of the Land Tax Management Act 1956 (NSW). As a fixed trust, it is taxed on the value of the property reduced by the applicable threshold — the same basis as individual ownership.
The saving can be up to $17,200 per year (subject to annual adjustment of thresholds, land values and rates) — while retaining all the flexibility, asset protection, stamp duty planning and CGT concession eligibility that a trust structure provides and that individual ownership cannot.
The difference between a standard trust and an MGS NSW Land Tax Unit Trust is stark — and it compounds every single year the property is held.
| General threshold | $1,075,000 |
| Premium threshold | $6,571,000 |
| Between thresholds | $100 + 1.6% above $1,075,000 |
| Above premium threshold | $88,036 + 2% above $6,571,000 |
Land tax is assessed on the average land value (unimproved value averaged over the prior three years). The threshold deduction ($1,075,000 in 2026) reduces the taxable base. Rate: $100 + 1.6% of land value above $1,075,000, up to the premium threshold of $6,571,000, then $88,036 + 2% above $6,571,000.
Land owned by a special trust has no threshold deduction. The flat 1.6% rate applies to every dollar of land value from the first dollar. This is what makes standard unit trusts and discretionary trusts so expensive to hold land in.
MGS recommends considering this structure whenever a client is buying investment property in NSW — but there are specific scenarios where it delivers the greatest benefit.
Any client buying a NSW investment property with a land value below the premium threshold will benefit from retaining the deduction. For land values below the threshold, land tax is nil — identical to individual ownership.
Clients who wish to negative gear into a property can borrow to acquire units in the trust. Interest may be deductible in their own name, while the trust provides asset protection and the land tax benefit — delivering the best of all worlds.
Clients who may want to transfer the property to an SMSF in the future cannot do so if they own it in their own names — the SIS Act prohibits it. A unit trust purchased today preserves the SMSF option for tomorrow.
Individual ownership offers no structural protection against creditors. The NSW Land Tax Unit Trust provides asset protection — the property is held by the trustee, not the individual — while maintaining the same land tax cost.
Partners, family members or business associates purchasing property together benefit from the fixed unit structure — each holder's interest is defined by their unit holding, legally enforceable, and transferable without disturbing the property itself.
As land values increase, the impact of the tax-free threshold becomes proportionally smaller. For high-value properties (in the millions), the annual threshold saving may be negligible relative to other structural considerations. Specific advice should always be obtained.
The MGS NSW Land Tax Unit Trust is a fixed unit trust with a single class of units. All unit holders are presently entitled to the income and capital of the trust in the same proportion as their unit holding bears to the total units on issue. There are no discretionary elements — this fixed structure is the foundation of its fixed trust classification.
The trust contains a single class of units only — unlike hybrid unit trusts, the NSW Land Tax Unit Trust may not issue units with special rights. This constraint is the price of the land tax benefit: the fixed, undifferentiated structure is what satisfies the NSW OSR requirements.
Unit holders borrow to acquire units in the trust. The trust then uses those funds to acquire property and generate arm's-length revenue. MGS is of the opinion that the Commissioner's concerns regarding interest deductibility in TD 2009/17 have no application to a fixed trust — borrowed money used to acquire units in a fixed trust, where the trust uses those moneys to acquire income-producing property, would be deductible to the borrower.
| Transfer of units | ✓Permitted — but redemption & re-issue preferred to avoid stamp duty |
| Transmission on death or bankruptcy | ✓Permitted — referred to in the deed as a transmission |
| Redemption of units | ✓At Calculated Unit Value — may require an approved valuer |
| Issue of new units | ✓At Calculated Unit Value — may be for non-cash consideration |
| Issue of units with special rights | ✗Not permitted — single class only |
Yes — a discretionary trust can be a unit holder in an NSW Land Tax Unit Trust. However: NSW secondary land tax assessment may result in loss of that proportion of the threshold attributable to the discretionary trust's unit holding. Unit holders who are themselves discretionary trusts should obtain specific land tax advice before proceeding.
Choosing the right structure for NSW investment property involves weighing land tax, flexibility, SMSF compatibility and negative gearing. The table below summarises the key differences.
| Feature | Individual ownership | Standard unit / discretionary trust | MGS NSW Land Tax Unit Trust |
|---|---|---|---|
| NSW land tax threshold | ✓ Threshold applies | ✗ No threshold — flat 1.6% | ✓ Threshold applies — OSR approved |
| Annual land tax cost | Concessional — threshold deducted | 1.6% of full land value from $1 | ✓ Same as individual — threshold deducted |
| Asset protection | ✗ None | ✓ Yes | ✓ Yes |
| Negative gearing | ✓ Yes — borrow directly | Complicated — special trust issues | ✓ Yes — borrow to acquire units |
| Future SMSF transfer | ✗ Prohibited (SIS Act) | ✓ Possible | ✓ Yes — SMSF-compatible |
| CGT concessions | ✓ Available | ✓ Available | ✓ Available |
| Stamp duty flexibility on sale | ✗ Property must be transferred | ✓ Units may be transferred | ✓ Units may be redeemed and re-issued |
| Unit special rights | N/A | ✓ Multiple unit classes available | ✗ Single class only |
| Discretionary distributions | N/A | ✓ Available (discretionary trust) | ✗ Pro-rata only — fixed trust |
Common questions about the MGS NSW Land Tax Unit Trust. For specific land tax advice, contact a qualified NSW land tax specialist.
Already have an NSW unit trust holding land? Contact MGS. We will require a copy of the trust deed, the latest Land Tax Notice of Assessment, and details of existing units on issue. MGS will advise on whether changes can be effected without triggering adverse tax consequences.
Request a ReviewCreate your MGS account or log in at macquariegs.com.au. Registration is free and takes under two minutes.
Provide the Trustee details, Initial Unit Holders and Initial Amount. Our form guides you through each field. Confirm the property is located in NSW and that individual unit holders (not discretionary trusts) will be used to preserve the full threshold benefit.
Our team prepares a bespoke MGS NSW Land Tax Unit Trust deed to your specifications. Standard turnaround is 1–2 business days.
The deed is delivered ready for execution. Our explanatory memorandum covers establishment, NSW stamp duty obligations, unit administration, and the annual 30 June distribution resolution requirement.
Questions? Call us on (02) 9231 5111
Your message has been sent and a member of our team will respond to your inquiry soon.
If your matter is urgent, please call us on the phone number listed above.