Cambewarra Developments Pty Ltd trading as Cambewarra Developments Unit Trust v Chief Commissioner of State Revenue

[2025] NSWCATAD 243

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Cambewarra Developments Pty Ltd trading as Cambewarra Developments Unit Trust v Chief Commissioner of State Revenue [2025] NSWCATAD 243

Hearing dates:

25 August 2025

Date of orders:

30 September 2025

Decision date:

30 September 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

EA MacIntyre, Senior Member

Decision:

(1) The assessment under review is revoked.

(2) The matter is remitted to the Chief Commissioner of State Revenue for determination in accordance with these reasons.

Catchwords:

ADMINISTRATIVE LAW - administrative review - assessment - objection - appeal - review by Civil and Administrative Tribunal

STATE TAXES - land tax - special trust - fixed trust - interpretation - capital - assets - present entitlement - absolute entitlement - rule in Saunders v Vautier - unit trust

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Land Tax Management Act 1956 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53

David & Ros Carr Holdings Pty Ltd v Ritossa [2025] NSWCA 108

Re Dion Investments Pty Ltd [2014] NSWCA 367

Nunc Coepi Pty Ltd atf Viera Family Unit Trust v Chief Commissioner of State Revenue [2025] NSWCATAD 143

Pontiac Trading Co Pty Ltd as trustee for the Karina Surjadi Family Trust v Chief Commissioner of State Revenue [2024] NSW CATAD 114

Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 (affd (1841) Cr & Ph 240; 41 ER 482

Sayden Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 111

Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang [2016] NSWCA 370

Texts Cited:

Jacob’s Law of Trusts in Australia, 7th Ed

Category:

Principal judgment

Parties:

Cambewarra Developments Pty Ltd as trustee for Cambewarra Developments Unit Trust (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Counsel:
D Lander (Respondent)

Solicitors:
Reid Law (Applicant)
Crown Solicitor (Respondent)

File Number(s):

2025/00093712

Publication restriction:

Nil

REASONS FOR DECISION

1. This is an application for review of a decision of the Chief Commissioner of State Revenue ("the Respondent") to assess land tax on the applicant in this matter, Cambewarra Developments Pty Ltd as trustee for Cambewarra Development Unit Trust (“Applicant”).

2. The dispute between the parties concerned whether or not the Applicant was to be taxed as a “special trust” under the Land Tax Management Act 1956 (NSW) (“LTMA”).

3. The Applicant said that it should not be taxed as a special trust because it was a “fixed trust”.

4. The Respondent disagreed. The Respondent said that the Applicant failed to satisfy requirements as to ownership of trust property that had to be met for the Applicant to be a “fixed trust”.

Background

5. The Applicant was trustee of the Cambewarra Development Unit Trust (“Trust”) established under a deed dated 30 March 2023 (“Deed”).

6. In its capacity as trustee, the Applicant was the registered owner of land at Cambewarra in NSW.

7. On 21 June 2024, the Respondent wrote to the Applicant advising of the possibility of a land tax liability and requested a copy of the deed under which it was trustee and the unit register with details for unit holders.

8. By notice dated 22 August 2024, the Respondent informed the Applicant that the Applicant had been assessed under the LTMA (s 3A) as a “special trust” for the land owned by it in NSW as of 31 December 2023.

9. By objection of 4 October 2024, the Applicant objected to the assessment of liability to land tax.

10. The Respondent disallowed the Applicant’s objection on 9 January 2025.

11. By deed dated 14 December 2024, the terms of the Deed were varied (“Variation Deed”).

12. By notice dated 21 March 2025, the Respondent informed the Applicant that the Applicant had been assessed under s 3A of the LTMA as a “special trust” for the land owned by it in NSW as of 31 December 2024 for the 2025 land tax year.

13. On 7 May 2025, the Applicant forwarded the Variation Deed to the Respondent and lodged an objection to the assessment for the 2025 land tax year.

14. On 14 May 2025, the Respondent disallowed the Applicant’s objection for the 2025 land tax year.

15. On 7 March 2025, the Applicant lodged an application for administrative review by the Civil and Administrative Tribunal (“Tribunal”) in respect of the assessment for the 2024 land tax year.

16. On 26 May 2025, the Applicant obtained leave to amend its application for administrative review to include an application for review of the assessment for the 2025 land tax year.

17. The Applicant, on 25 July 2025, conceded the assessment for the 2024 land tax year. What remains in dispute in these proceedings is the assessment for the 2025 land tax year.

Applicant’s rights of review

18. Where tax has been assessed, s 86 of the Taxation Administration Act 1996 (NSW) (“Administration Act”), allows rights of objection to a taxpayer dissatisfied with an assessment, including an assessment of the kind made in this matter. This is an internal review process under which the Chief Commissioner of State Revenue, the Respondent in these proceedings, must consider and determine the objection (s 91 of the Administration Act).

19. A taxpayer who is dissatisfied with the decision made upon the Respondent’s determination of an objection, may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 (NSW) (“ADR Act”)of the decision of the Chief Commissioner of State Revenue.

20. These circumstances have arisen in the present matter as set out in the background above, so bringing the matter within the jurisdiction of the Tribunal.

21. The onus of proving its case lies with the Applicant (s 100(3) of the Administration Act).

22. The Tribunal, dealing with the taxpayer’s application, may do one or more of the following under s 101 of the Administration Act:

“(a) confirm or revoke the assessment or other decision to which the application relates,

(b) make an assessment or other decision in place of the assessment or other decision to which the application relates,

(c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid,

(d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision,

(e) make any further order as to costs or otherwise as it thinks fit.”

Consideration

23. Under s 7 of the LTMA, land tax is to be levied and paid on the taxable value of all land situated in NSW which is “owned” by taxpayers other than land which is exempt from taxation under the LTMA.

24. Section 3 of the LTMA defines “owned” and “owner” as follows:

“Owned and similar expressions have a meaning corresponding with that of owner.

Owner includes—

(a)  in relation to land, every person who jointly or severally, whether at law or in equity—

(i)  is entitled to the land for any estate of freehold in possession, or

(ii)  is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise,

(b)    (Repealed)

(c)  in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C or 21D applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph, and

25. The Land Tax Act 1956 (NSW) (“LTA”) charges “special trusts” under s 3AB(2) and Schedule 13 with land tax at the rate of 2 cents for each $1 of the taxable value. The question for determination in these proceedings is whether the trust established under the Deed as amended under the Variation Deed is a “special trust”.

26. Section 3A of the LTMA defines a “special trust” as follows:

“3A   Special trust—meaning

(1)  For the purposes of this Act, a trust is a special trust if—

(a)  the trust property includes land, and

(b)  the trustee of the trust is the owner of the legal estate in the land, and

(c)  the trust is not a fixed trust.

(2)  For the purposes of this section, a trust is a fixed trust if the equitable estate in all of the land that is the subject of the trust is owned by a person or persons who are owners of the land for land tax purposes (disregarding section 25 (3)).

(3)  For the purpose of determining whether a trust is a fixed trust under this section, any equitable interest of the trustee as trustee of the trust is to be disregarded.

(3A)  If a trust satisfies the relevant criteria, the persons who are beneficiaries of the trust under the trust deed are taken to be owners of an equitable estate in the land that is the subject of the trust and, accordingly, the trust is taken to be a fixed trust.

Note.

Under section 25, owners of an equitable estate or interest in land are liable in respect of land tax as if they were legal owners of the land. Owners of an equitable estate in land are treated as secondary taxpayers.

(3B)  For the purposes of this section, the relevant criteria are as follows—

(a)  the trust deed specifically provides that the beneficiaries of the trust—

(i)  are presently entitled to the income of the trust, subject only to payment of proper expenses by and of the trustee relating to the administration of the trust, and

(ii)  are presently entitled to the capital of the trust, and may require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust property,

(b)  the entitlements referred to in paragraph (a) cannot be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the trust deed,

(c)  if the trust is a unit trust—

(i)  there must be only one class of units issued, and

(ii)  the proportion of trust capital to which a unit holder is entitled on a winding up or surrender of units must be fixed and must be the same as the proportion of income of the trust to which the unit holder is entitled.

(4)  A trust is not a special trust—

(a)  if the trust is solely a charitable trust, or

(b)  if clause 9 of Schedule 1A applies in respect of the land that is the subject of the trust, or

(c)  if the trust is a concessional trust, or

(d)  in relation to any land tax year in which it is a superannuation trust, or

(e)  if the trust is established by will, but only during the period ending on the expiration of 2 years after the date of death of the testator, or

(f)  in relation to any land tax year in which it is a family unit trust, as provided by Schedule 1AA”.

27. Section 3 defines a “unit trust” as follows.

“Unit trust” means a trust in respect of which the beneficiaries of the trust are owners of units in the trust and each unit holder, or each unit holder of a particular class—

(a) is entitled, as a beneficiary of the trust, to participate in any income or capital distributions (or both) of the trust, and

(b) the amount or proportion of any income or capital distribution to which the unit holder is entitled is based on the number or class of units owned by the person (or both)  a person who, by virtue of this Act, is deemed to be the owner”.

28. The effect of the above provisions is that for the Trust to be taxed as a “special trust”, it must satisfy all three requirements set out in s 3A(1). The first requirement is that the trust property include land. The second is that the trustee be the owner of the legal estate in the land. There was no dispute that these requirements were satisfied.

29. The third requirement for a trust to be a “special trust” is that the trust must not be a “fixed trust”. If the Trust were a “fixed trust”, it would not satisfy the third requirement for a special trust and as a result could not be taxed as such. The dispute between the parties was about whether or not the third requirement was satisfied. This is the question for determination in these proceedings, that is whether or not the Trust is a “fixed trust”.

30. To fall within the description of a “fixed trust”, s 3A(2) relevantly requires that the “equitable estate in all of the land that is the subject of the trust is owned by a person or persons who are owners of the land for land tax purposes”.

31. However, s 3A(3A) goes on to provide that if a trust satisfies the “relevant criteria”, the persons who are beneficiaries of the trust under the trust deed are taken to be owners of an equitable estate in the land that is the subject of the trust and, accordingly, the trust is taken to be a “fixed trust”. In other words, whether or not the equitable estate is actually “owned” by a person or persons who are owners of the land for land tax purposes within the meaning of s 3A(2), the required ownership of an equitable estate is imputed to the beneficiaries if the “relevant criteria” are satisfied.

Terms of the Trust

32. The determination of the question at hand requires consideration of whether the provisions of the Deed as amended by the Variation Deed fall within s 3A(2) and if not, whether s 3A(3A) applies. Relevant provisions of the Deed as amended include the following.

33. Clause 3.2 contains the relevant declaration of trust, providing that the trustee:

“.. holds the assets in the Fund presently for the Unitholders on the trusts and subject to the terms and conditions of this deed”.

34. The declaration so made attaches to the “Fund”. The “Fund” in turn is defined in cl 1.1 to include:

“(a) the Initial Sum plus all other money paid to and accepted by the Trustee on the issue of Units;

(b) all other money, property and investments acquired or accepted by the Trustee which become subject to the rights and obligations of this deed;

(c) the investments and property from time to time representing the Fund together with all additions or accretions to the Fund; and

(d) all Income

and includes any part of the Fund”.

35. The Trust as such contemplates that “Units” will be issued. A “Unit” is defined in cl 1.1 to mean “an undivided part or share in the Fund”.

36. “Unitholder” is defined in cl 1.1 to mean "… a person for the time being registered as the holder of any one or more Units and includes persons jointly so registered”.

37. Clause 4.1 expresses what rights to the trust estate attach to a Unit in the following terms. It says that the “beneficial interest in the Fund is divided into Units”. Each Unit in other words carries a fractional interest in the Fund. What that interest is understood to be in equity is considered below.

38. The Variation Deed was executed on 14 December 2024. It added the following provisions to the Deed, describing the entitlements of Unitholders.

39. A new clause 12.2 provided that:

“(a) All Unitholders shall be presently entitled to all Income, subject only to the payment of proper expenses by the Trustee in relation to administration of the Fund.

(b) Where a general reserve of funds for accumulated undistributed Income is created by the Trustee, the present entitlement referred to in subclause (a) above is still conferred over this accumulated undistributed Income of the Fund for the benefit of the Unitholders”.

40. A new clause 8.1 provided that:

“All Unitholders are presently entitled to all of the assets of the Fund such that any unit holder may require the Trustee to wind up the Fund and distribute the trust property, or the net proceeds on the realisation of the trust property, to the Unitholders”.

41. The Applicant says that the effect of the amendments to the Deed made by the Variation Deed is that the requirements of s 3A(3B) are satisfied and that as a consequence, the Trust must be taken to be a “fixed trust”. If so, in the Applicant’s submission, the Applicant cannot be the trustee of a “special trust” and be taxed as such.

42. The Respondent on the other hand says that even as amended by the Variation Deed, the Trust is not a “fixed trust” for the following reasons:

1. The Unitholders of the Trust are not owners of an equitable estate in the land in the sense required by s 3A(2) of the LTMA.

2. On a proper interpretation of the Variation Deed, the deeming requirements of s 3A(3B) of the LTMA are not met.

3. On the proper interpretation of the Variation Deed, the unit holders do not have a present entitlement to either income or capital of the Trust.

Equitable estate – s 3A(2) of LTMA

43. The first question for consideration is whether or not “the equitable estate in all of the land” the subject of the Trust was “owned by a person or persons who are the owners of land for land tax purposes” within the meaning of s 3A(2) of the LTMA.

44. It was agreed, by the Applicant,, that the Unitholders of the Trust were not “owners” within the meaning of s 3A(2). The Applicant’s concession was correctly made.

45. The High Court in CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53 considered the question of who owned property subject to a particular unit trust for the purposes of the Land Tax Act 1958 (Vic). The Court held that unitholders of that unit trust could not be said to be beneficial owners and were not the “owners” for the purposes of assessing land tax in Victoria. The High Court said that the following findings at first instance were “in point and conclusive”, (at [37]):

"It may well be that the income of the fund as finally constituted and distributed will include all of the rents and profits generated by a particular parcel of land within the fund. But it is distinctly possible that it will not. Each of the deeds gives power to the trustee to provide out of receipts for future and contingent liabilities; to apply receipts in the purchase of any property or business; to invest receipts in authorised investments and to deal with and transpose such investments; and the only right of the unit holder is to a proportionate share of the income of the fund for the year.

The Commissioner contends that the trustees' powers of disposition and transposition make no difference. He submits that insofar as receipts from particular properties may be applied in making payments other than to a unit holder, they must be seen as made on behalf of the unit holder and in that sense as received by the unit holder. He says that it is in principle no different to the case of a simple trust of land with only one beneficiary, under the terms of which the trustee is entitled to apply receipts in the payment of obligations and in the making of provisions in connection with the management of the land. The Commissioner contends that in such a case there can be no doubt that the beneficiary would be liable to tax as 'owner'.

But I think there is a difference. In the case of a simple trust of the kind instanced by the Commissioner the entitlement of the trustee to apply part of the receipts in defined ways determines the amount of the income which the beneficiary has a right to receive. Contrastingly, in a case of a complex unit trust of the kind with which I am concerned, the entitlement of the trustee to apply receipts in defined ways informs the nature of the income that the unit holders have a right to receive: not a total of all of the receipts derived from each asset the subject of the fund but rather such if any income as may be derived from the product of the application of gross receipts in various ways." (footnotes omitted)”, (at [37]).

46. The High Court did not agree that the unit holders could hold beneficial ownership of the trust estate. The Court said (at [51]):

“In the present case, the unsatisfied trustees' right of indemnity was expressed as an actual liability in each of the relevant accounts at each 31 December date ….. Until satisfaction of rights of reimbursement or exoneration, it was impossible to say what the trust fund in question was”.

47. The Tribunal in Nunc Coepi Pty Ltd atf Viera Family Unit Trust v Chief Commissioner of State Revenue [2025] NSWCATAD 143 recently considered the questions of what rights unitholders had. The Tribunal accepted that the unitholders of a unit trust did not have a proprietary interest in the land in respect of which the applicant in that case was the registered proprietor (at [50]). There had been no resolution to vest any of the property of the relevant unit trust in the possession of any of its unitholders. In these circumstances, Gatland SM said that she could not be satisfied that the unit trust in question should be considered a “fixed trust”, having regard to the LTMA, ss 3A(2) and the definition of “owner” in the LTMA, s 3.

47. The interest of the Unitholders is subject to powers of the trustee to deal with both Income and the Fund in the manner set out in the Deed as amended. The trustee, first of all, may pay all costs, charges and expenses of administering the Trust during any financial year out of Income and have recourse to the “capital of the Fund” if the Income is insufficient (cl 16.3). Additionally, the trustee has an entitlement to be indemnified out of Income or “capital” in similar terms (cl 16.3(b)). The trustee also has a general right of indemnity from the “Fund in respect of all liabilities incurred by the Trustee relating to the proper execution of any powers, duties, authorities or discretions under this deed” (cl 16.4).

48. The trustee additionally has specific investment and management powers set out in Schedule 2, including powers to invest, borrow, lend and sell parts of the Fund. Further, the Deed as amended specifically preserves powers conferred by law unless a contrary intention appears in the Deed as amended (cl 14.2). This will presumably arm the trustee with relevant powers allowed under the Trustee Act 1925 (NSW) in addition to powers specifically given to them under the Deed as amended.

49. These are circumstances that, as in CPT Custodian, mean that the Unitholders hold their interests subject to the powers of the trustee under the Deed as amended, to deal with income and property of the Trust in the ways allowed and incur liabilities. These are not circumstances that allow for identification of what the trust fund in question is at any given time, even if the trustee’s right of indemnity can be disregarded (Sayden Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 111, at [18]). As explained in CPT Custodian, a trust operating in this way does not allow for unitholders to hold equitable ownership of the trust estate. As a result, they hold no ownership interests of the kind described in s 3A(2A) of the LTMA.

Relevant criteria – s 3A(3A) and (3B) of the LTMA

51. If the Trust does not fall within s 3A(2) of the LTMA, the matter remaining in dispute is whether the “relevant criteria” set out in s 3A(3B) have been satisfied. If they have been satisfied, the Trust will answer the description of a “fixed trust”, regardless of having failed to satisfy the requirements for a “fixed trust” under s 3A(2).

52. Satisfaction of the “relevant criteria” turns on whether or not the terms of the Deed as amended meet the requirements of s 3A(3B) of the LTMA. Determination of that question, in turn, requires consideration of the provisions of the Deed as amended.

53. The first provision requiring consideration is cl 12.2 dealing with entitlements to income. The Respondent said that cl 12.2, following the amendments made by the Variation Deed, on its face satisfied the requirement set out in s 3A(3B)(a)(i) of the LTMA that the beneficiaries must be “presently entitled to the income of the trust, subject only to payment of proper expenses by and of the trustee relating to the administration of the trust”. I agree that the terms of cl 12.2, on their face, satisfy this requirement.

54. The Respondent, however, disputes the proposition that cl 8.1 of the Deed as amended satisfies the requirements of s 3A(3B)(a)(ii) of the LTMA. That requirement is that the beneficiaries be presently entitled to the “capital of the trust”, and may “require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust property”.

55. The terms of cl 8.1 of the Deed as amended says that the unitholders of the Trust are “presently entitled to all of the assets of the Fund such that any Unit holder may require the Trustee to wind up the Fund and distribute the trust property, or the net proceeds on the realisation of the trust property, to the Unitholders” (emphasis added).

56. The Respondent says that the terms of cl 8.1 do not specifically provide that the Unitholders are presently entitled to the capital of the Trust as required by s 3A(3B)(a)(ii) of the LTMA because that entitlement is expressed to be to the assets of the Trust.

57. The question for determination is whether the use of the terms “assets” in cl 8.1 fails to capture what the term “capital” encompasses.

58. The term “assets” is not defined in the Deed as amended. In its ordinary meaning, an “asset” is:

“2.  an item of property, as a building, a piece of equipment, etc.

3.  an economic resource” (The Macquarie Dictionary, online 2024).

59. The term “capital” is not defined in the LTMA or the Deed as amended. It is, however, used in s 3A(3B) in contradistinction to the reference to “income” of a trust. That distinction is also found in the ordinary meaning of “capital”, “(in trust law) the original fund of money or property, as distinct from the income or profits produced thereby” (The Macquarie Dictionary, online 2024).

60. There can be little doubt that both the terms “capital” and “assets”, understood in their ordinary sense, will capture the property of a trust, including land and money. The term “assets”, to the extent that it will extend generally to any economic resource, whether or not property, may have a wider reach than what is understood to be “capital”.

61. The “meaning of language is inevitably contextual” (Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang [2016] NSWCA 370, at [68]). The other provisions of the Deed supply the context relevant to determining the intended meaning of what is an “asset”.

62. Under cl 3.2 of the Deed as amended, what the trustee holds is the “Fund”. The “Fund” of the Trust is defined to include “the investments and property from time to time representing the Fund”. I have little difficulty in accepting that the concept of an “asset”, in its ordinary meaning, will include investments and property of the Trust. In other words, I find no discordance between what is brought within the “Fund” as defined in cl 3.2 and what is an “asset” within the meaning of cl 8.1 of the Deed as amended. What follows is that the term “assets” in cl 8.1 will capture the property the trustee holds in its capacity as such within the Fund and not leave outside its reach any property within the Fund.

63. The Deed as amended specifically refers to the “capital” of the Fund in cl 16. It is from the “capital” of the Fund that the trustee may claim the right of indemnity allowed to it under cl 16. I find nothing in the context of the Deed as amended to indicate that the trustee’s right of recourse to the “capital” of the Fund will allow them recourse to only part of the property within the Fund. What is the “capital” of the Fund and the property within the Fund, in my opinion, do not involve different subject matters.

64. I am satisfied for the above reasons that cl 8.1 will capture what is the “capital” of the Trust within the meaning of s 3A(3B), in that the reach of the term “assets” will extend to capture all property of the Trust and not fall short in its reach in doing so. What cl 16 identifies as the “capital” of the Fund will also encompass the property of the Fund.

65. The requirement set out in s 3A(3B)(a) is that the Deed as amended “specifically provides” for the matters set out in paragraphs (i) and (ii) of the subclause. I do not think that s3A(3B)(a) operates as a lexical prescription demanding use of the exact language found in paragraphs (i) and (ii). The expressions used in s 3A(3B)(a) are “operative rather than conclusory” (Sayden, at [52]). As long as the language used in cl 8.1 gives effect to what paragraphs (i) and (ii) require and do not fall short of what is required, I think that the Deed as amended meets the statutory requirements set out in paragraph (a).

66. Equally, I do not think that mechanically reproducing the words set out in paragraphs (i) and (ii) would, of itself, satisfy the requirements of s 3A(3B)(a). The relevant provisions operate within the Deed as a whole. If the terms of the Deed as amended, taken as a whole, impinge upon the reach of provisions that reproduce the language set out in s 3A(3B)(a)(i) and (ii) such that the Deed as amended fails to achieve what the statute requires, these are not circumstances which would allow for satisfaction of s 3A(3B)(a).

67. The Respondent submitted that a number of provisions in the Deed as amended, derogated from the premise of “present entitlement” within the meaning of cl 12.2 and 8.1. I will consider below each of these provisions and their effect.

Amendment of Trust

68. Clause 20 of the Deed as amended gives the Trustee a power of amendment but it specifically prevents the making of any “alteration, modification, variation, amendment, revocation or addition” to amend clauses 12.2, 8.1 or 8.2.

69. The Respondent said that this limitation on the power to amend could be overcome with the consent of the unitholders. In Pontiac Trading Co Pty Ltd as trustee for the Karina Surjadi Family Trust v Chief Commissioner of State Revenue [2024] NSWCATAD 114, the Tribunal considered whether a present entitlement in the required form was established. The Tribunal had regard to a provision of the relevant trust deed permitting the trust deed to be amended where the trustee had the written consent of a beneficiary. The Tribunal said that this provision meant that the beneficiaries’ entitlement to income of the trust and the capital of the trust could be removed, restricted or otherwise affected within the meaning of 3A(3B)(b) of the LTMA, and that for this reason the trust the subject of that case, was not a “fixed trust”.

70. The Deed as amended, however, has no provision that allows the beneficiaries by consent, to override the application of cl 20 in the manner submitted by the Respondent. It is expressed to prevent amendment without any such qualification.

71. If the Respondent’s submission is that regardless, there was some way in which the beneficiaries could consent to a relevant amendment, the Respondent did not in his submissions indicate the basis for such an outcome, whether under the terms of the Trust or otherwise.

72. The High Court in CPD Custodian described circumstances in which beneficiaries could consent to an amendment not allowed under the terms of a trust, in the following terms, at [43]:

“Saunders v Vautier is a case which has given its name to a "rule" not explicitly formulated in the case itself, either by Lord Langdale MR (at first instance) or by Lord Cottenham LC (on appeal). In Anglo-Australian law the rule has been seen to embody a "consent principle" recently identified by Mummery LJ in Goulding v James as follows:

"The principle recognises the rights of beneficiaries, who are sui juris and together absolutely entitled to the trust property, to exercise their proprietary rights to overbear and defeat the intention of a testator or settlor to subject property to the continuing trusts, powers and limitations of a will or trust instrument."

73. Subsequently, the Court of Appeal in Re Dion Investments Pty Ltd [2014] NSWCA 367 (per Barrett JA) set out circumstances in which equity may allow variation of a trust with the consent of the beneficiaries, at [46]:

“Where the trust instrument contains no such variation provision, principles of equity may countenance variation of the terms of the trust with the unanimous consent of the beneficiaries if all are in being, sui juris and absolutely entitled. Under the principle in Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 (affd (1841) Cr & Ph 240; 41 ER 482), beneficiaries in that position are entitled to put an end to the trust and to require that the trust property be transferred to them. Their capacity to produce that result also enables them to require, as an alternative, that the property be held by the trustee upon varied trusts; but, if they do so require, the situation may in truth be one of resettlement upon new trusts rather than variation of the pre-existing trusts (and the trustee may not be compellable to accept and perform those new trusts: see CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53; 224 CLR 98 at [44])”.

74. In the absence of the Unitholders’ holding their rights as absolute entitlements in the manner contemplated by CPT Custodian, I do not think that the “consent principle” can have application in the present case. I am satisfied that the entitlements described in paragraph 3A(3B)(a) cannot be removed, restricted or otherwise affected as required by s 3A(3B)(b) in the absence of a power to amend the Deed and absent the application of the “consent principle”.

75. Section 3A(3B)(b) in its express terms, prevents the relevant entitlements from being “removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the trust deed”. A question arises as to what is a “discretion” within the meaning of s 3A(3B)(b), in particular whether or not a “discretion” in the sense used in s 3A(3B)(b) refers to the exercise by a trustee of a particular discretionary power existing under a trust, or whether a “discretion” in its intended meaning can extend more widely to encompass a power to amend the very terms of the trust.

76. What is a trustee’s discretion has a meaning in the law of trusts, to generally include all acts which the trustee may do in the administration and management of the trust, whether the authority to do them derives expressly from the trust instrument or is implied by statute (Jacob’s Law of Trusts in Australia, 7^th Ed, at [1606]). However, even if a “discretion” has a wider meaning to include a power to amend the very trust giving the trustee their powers and discretions, I have found that the relevant power to amend the Trust is not one that could allow an amendment of cl 12.2 or 8.1 for the reasons set out above. I do not, in these circumstances, need to consider whether the term “discretion” has a wider or narrower meaning in the context of s 3A of the LTMA.

77. If the Respondent’s submission concerns the future possibility of further amendments to cl 12.2 and 8.1 of the Deed by first removing cl 20 (e) by using the power of amendment under cl 20 to do so, I do not think that the terms of the Trust can allow this. To remove cl 20(e) followed by an amendment to cl 12.2 and 8.1, is in my opinion, a contrivance that would defeat the intention manifested by the terms of the Deed as amended. That intention is to prevent amendments to cl 12.2 and 8.1 by whatever means.

Changes outside Deed

78. A further submission of the Respondent was that the operation of cl 20 applied to the instrument itself, that is the Deed as amended. As such, in the Respondent’s submission, cl 20 fell short of the requirement that the entitlements in question not be removed, restricted or otherwise affected in the manner contemplated by s 3A(3B)(b) by whatever means. I understood the Respondent’s submission to be that the entitlements in question could be affected in a way that contravened the requirements of s 3A(3B)(b) by means other than amendment of the Deed.

79. The entitlements in question arise under and by reason of the Deed as amended. There is no other source of the relevant entitlements that the Respondent could identify. The Trust expressly provides that the deed “contains the entire understanding between the parties concerning the subject matter of the deed and supersedes all prior communications between the parties” (cl 21.4(a)). I do not in these circumstances see how the entitlements in question under the Trust can be amended or varied other than under the terms of the Trust.

80. If the submission of the Respondent was that relevant changes to entitlements of beneficiaries could occur outside the terms of the Trust as set out in the Deed as amended, say by reason of the general operation of the law of trusts, the Respondent did not specify any particular basis in law or equity as to how this could occur, whether under s 86A of the Trustee Act 1925 (NSW) or otherwise.

New units

81. The Respondent said that the relevant entitlements could be affected by the issue of new units in a way that changed the proportionate entitlements of the unitholders. Because of the ability of the trustee to do this, s 3A(3B)(b) was, in the Respondent’s submission, not satisfied.

82. I am unable to agree with this submission. Compliance with s 3A does not require that the relevant proportionate entitlements of beneficiaries cannot change. There is no express provision to this effect and nor, in my opinion, can such a limit on its operation be implied. It requires that the “beneficiaries” be “presently entitled” to both income and capital within the meaning of the provision. What cannot be changed are rights making up that entitlement, regardless of who holds them from time to time and in what proportion.

83. The Respondent specifically referred to the power under cl 4.3 of the Deed as amended for the Trustee to create and issue additional units “on such terms and conditions and with such rights and privileges as the Trustee determines”. In the Respondent’s submission, the combined effect of cl 20 and cl 4.3 is that with the consent of the unitholders, the Trustee can amend the Deed and issue new units which could “remove, restrict or otherwise affect the entitlements” under cl 12.2 and 8.1.

84. I have already addressed the question of what cl 20 allows and does not allow. I have found that the relevant power to amend the Trust under cl 20 is not one that could allow an amendment of cl 12.2 or 8.1 (at [70] - [77] above).

85. Clause 4.3 for its part allows for the issue of new units on the terms described in cl 4.3. However, I do not agree that this is an unlimited power to issue units on any terms and conditions. The way in which the power can be exercised will be governed by the context of the Deed as a whole. The terms and conditions attaching to any new units must accord with the terms of the Trust. I do not think that the trustee can use its power under s 4.3(b) in a way that breaches other provisions of the Deed as amended, including the entitlements set out in ss 12.1 and 8.2.

Determination of Income

86. The Respondent submitted that there were other provisions in the Deed as amended that were inconsistent with cl 12.2 and 8.1. The Respondent, first of all, said that the right to income under cl 12 depends on a determination being made under cl 12.1. In the Respondent’s submission, the stipulation allowing a present entitlement to income was inconsistent with having to first make such a determination.

87. The Respondent’s submission requires consideration of what “Income” is within the terms of the Deed as amended. It is defined to include items such as any “accretion, gain, payment or receipt determined by the Trustee to be Income”. These are items that are not necessarily identifiable at each and every moment of time during the life of a trust as a quantified amount. The trustee will first need to analyse the financial data it has and make any required calculation, such as that required to identify the amount of a gain before being able to quantify “Income”.

88. Additionally, the power under cl 12.1 is not a power to determine what is the “Income” of the Trust, but the “Net Income”. What is “Net Income” is defined to mean the amount determined in accordance with cl 12.1. Clause 12.1 says that the power of determination may be exercised “so as to legitimately minimise the liability to income and capital gains tax of the Unitholders and of itself as trustee of the Trust”.

89. If the Respondent’s submission is that determination (and payment) of these liabilities for taxes diminishes the present entitlement of beneficiaries in a way that is inconsistent with s 3A(3B), I cannot agree. Section 3A(3B)(a)(i) specifically contemplates a present entitlement to the income of the trust, “subject only to payment of proper expenses by and of the trustee relating to the administration of the trust”. In these circumstances, subjecting a present entitlement to income to payment of tax liabilities of the Trust out of income does not contravene s 3A(3B)(a)(i).

86. The Respondent says that cl 12.2(b) limits the present entitlement created by cl 12.1(a) to circumstances where a reserve of funds is created.

87. I do not agree. Clause 12.2(b) does not limit the present entitlement allowed under cl 12.2(a). What it does is to allow but not mandate a general reserve of funds for accumulated undistributed Income being created by the Trustee. It does not allow anything to be done with that reserve in breach of cl 12.2(a) or to do anything at all with the general reserve. It just allows for its creation. If created, cl 12.1(b) specifically and expressly acknowledges the present entitlement under cl 12.1(a). In other words, if such a reserve is created, it must be dealt with in accordance with the unitholder’s present entitlements under cl 12.1(a). In these circumstances, I cannot see how the creation of a general reserve under cl 12.1(b) is inconsistent with the present entitlements to income vested under cl 12.1(a).

Offset

92. The Respondent submitted that the Trustee had the ability to offset undistributed income against aggregate amounts lent to a unit holder. In the Respondent’s submission, this meant that the purported present entitlement to undistributed income did not extend to circumstances where the undistributed income is applied against the loan accounts of Unitholders.

93. If the amount of a present entitlement to income is offset against a debt owed by the unitholder, I do not see how this diminishes or otherwise affects the amount of the unitholders “present entitlement”. The amount of that entitlement remains unchanged, whether the amount of that entitlement is paid to the Unitholder or whether the amount paid is adjusted to offset a debt owed by the unit holder.

Powers of trustee

94. The Respondent also made certain submissions concerning what he said were the consequences of the trustee’s powers. They included powers set out in cl 14 of the Deed as amended, such as powers of management and investment and allowed for the exercise of powers in relation to the Fund conferred by law. There were also provisions allowing the powers to be construed broadly and provisions preventing the interference by Unitholders with matters concerning the exercise of the trustee’s powers, authorities or directions.

95. The powers in question included powers to forfeit partly paid Units where there was a default in payment (cl 4.4). The Respondent’s submission was that such a power of forfeiture, was inconsistent with a provision that allowed a present entitlement to capital.

96. What is a present entitlement to capital is not a right that exists in abstraction. It is governed by the terms of the relevant trust deed. Any such entitlement can only arise once it comes into existence under the terms of the Trust. Under the Deed as amended, where the required capital has not been contributed and rights of forfeiture arise, no entitlement in respect of capital can remain in the hands of the Unitholder who has failed to pay up capital. In other words, these are not circumstances that give rise to an entitlement to capital that falls short of s 3A(3B). The Deed as amended would allow for no entitlement at all.

97. However, these circumstances do not mean that the partly paid capital after an event of forfeiture is not part of the Fund. There is nothing in the Deed as amended to indicate otherwise. As such, the provisions governing the Fund such as cl 8.2 continue to apply to whatever is part of the Fund, vesting a present entitlement in the hands of Unitholders who have acquired rights as Unitholders. Powers of forfeiture exercised against another person do not impinge upon the rights conferred on the Unitholders generally under cl 8.2 or otherwise.

Paramountcy

98. In Sayden, the required provision preventing the removal, restriction or otherwise affecting the provisions conferring a present entitlement to income and capital were expressed to apply “notwithstanding” any other provision of the deed in issue in that case. The Respondent said that in the absence of such words allowing paramountcy to cl 12.1 and 8.2, the Deed as amended failed to comply with s 3A(3B)(b).

99. I am unable to agree. First of all, cl 20 prevents any amendments being made to cl 12.1 and 8.2. These clauses as a result remain capable of operating in accordance with their terms without the future ability to change this outcome. Secondly, no provision in the Deed as amended raised by the Respondent in argument has the effect of overriding or limiting the operation of cl 12.2 or 8.1 for the reasons set out above.

100. On their proper construction, cl 12.1 and 8.2 are provisions that operate without the present entitlements they confer to income and capital being curtailed in any relevant way by the other provisions of the Deed considered above, for the reasons set out above. In these circumstances, the absence of specific language of paramountcy of the kind considered in Sayden, does not, in my opinion result in a failure of the Deed as amended, to satisfy s 3A(3B)(b).

What does “presently entitled” mean?

101. The Respondent says that the unitholders cannot, as a matter of law, be “presently entitled” to the capital of the Trust, relying on the authority of the High Court in CPT Custodian that no such entitlement could exist because “the unitholders were not the beneficial owners of the land”.

102. The submission of the Respondent misconceives the intended operation of s 3A(3B)(a). The Court of Appeal in David & Ros Carr Holdings Pty Ltd v Ritossa [2025] NSWCA 108, at [84] explained that “s 3A(3A) avoids the consequences of CPT Custodian by deeming persons who are beneficiaries of a trust satisfying the relevant criteria in s 3A(3B) to be owners of an equitable estate in land”. In other words, s 3A(3A) and (3B) are not provisions that require ownership rights to vest in beneficiaries in the way that s 3A(2) requires. It requires that the trust deed “specifically provide” for the matters set out in each of paragraphs (i) and (ii) of s 3A(3B)(a).

103. If the “relevant criteria” set out in cl 3A(3B) are satisfied, regardless of whether or not ownership interests of the kind required by s 3A(2) exist, s 3A(3A) will deem the required ownership interest. This is not a scheme that brings to bear upon s 3A(3B), ownership requirements of a kind required under s 3A(2).

104. To overlay the requirements set out in s 3A(3B) with additional requirements as to ownership derived from s 3A(2) does not accord with the statutory intention. Section 3A(3A) and 3A(3B) were introduced into the LTMA by the State Revenue Legislation Amendment (Tax Concessions) Act 2006 (NSW), in response to the decision of the High Court in CPT Custodian. The Explanatory Notes, accompanying the relevant bill before Parliament, describes the purpose of the amendments as follows:

“(b) to amend the Land Tax Management Act 1956 so as:

(i) to clarify the circumstances in which a trust will be treated as a fixed
trust or special trust under that Act and to grant land tax concessions in
respect of certain family unit trusts and other unit trusts that are
restructured to comply with the new provisions,…”.

105. The Explanatory Notes, in other words, contemplate that a unit trust may be “treated as” either a fixed trust or special trust, depending on whether or not the trust is “restructured to comply with the new provisions”. Where a trust has been “restructured” by the making of amendments in the manner required by s 3A(3B), there is nothing in either the terms of s 3A or in the explanatory notes to indicate that compliance with subsections (3A) and (3B) additionally requires proving ownership interests of a kind required under s 3A(2). To infer such a requirement would defeat the purpose of ss (3A) and (3B).

106. The Respondent says that for a present entitlement to exist, there can be “no other interest that precedes it”. In Sayden, the Court of Appeal said, at [17] – [19]:

“… present entitlement to capital is novel. Presumably, it means an interest in the trust property vested in interest and in possession in that there is no other interest in the property that precedes it, together with a present legal right to demand division of the trust property or its proceeds among the beneficiaries.

Any interest of the trustee under its right of indemnity is not relevant in this context because s 3A(3) of the Management Act requires any equitable interest of the trustee to be disregarded.

If a trust deed specifically provides that the beneficiaries are presently entitled to the income subject to payment of the trustee's proper expenses and they are presently entitled to the capital of the trust and may require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust property, the trust satisfies the relevant criteria and by reason of s 3A(3A) of the Management Act, the beneficiaries are taken to be the owners of an equitable estate in the land the subject of the trust and the trust is a fixed trust”.

107. The Respondent said that any right to be “presently entitled” had to be both “vested and indefeasible”.

108. The meaning of the term “presently entitled”, however, needs to be understood in the context in which it appears in the LTMA. It is not defined in the LTMA but appears in a context that gives it meaning as a required provision in a trust deed. As such, the intended meaning of “presently entitled” brings to bear the law of trusts, as found both in statute law and equity.

109. The Trust is expressed to be a “unit trust” and contains provisions dividing the entitlements of beneficiaries into “Units” (see [35]-[37] above). The LTMA sets out what is a “unit trust” in s 3 and sets out in s 3A(3B)(c) certain further requirements that must be satisfied for a “unit trust” to fall within the operation of s 3A. These further requirements are that there must be only one class of units issued. Additionally, the proportion of trust capital to which a unit holder is entitled on a winding up or surrender of units must be fixed and must be the same as the proportion of income of the trust to which the unit holder is entitled. It was not contested that the Deed as amended gave rise to a “unit trust” within the meaning of s 3A(3B)(c).

110. However, the Respondent submitted that the Trust contained provisions that were not customary for a unit trust. The Respondent did not provide any evidence to show that the terms of the Trust were not of a kind usually found in deeds applicable to “unit trusts” as generally understood. In the absence of such evidence, the Respondent did not press his submission.

111. While a trust must satisfy the definition in s 3 and also satisfy the further requirements of s 3A(3B)(a)-(c) if it is to be treated as a “unit trust” falling within s 3A(3B), the LTMA does not stipulate what other provisions the relevant trust deed may or may not include. As long as the further provisions do not impinge upon or operate in a way that is inconsistent with the requirements of s 3 or s 3A(3B), there is no reason why the deed cannot contain provisions dealing with other subject matters, especially those customarily found in unit trusts.

112. I am unable, in these circumstances, to find that the Trust is not a “unit trust” of the kind referred to in s 3A.

113. Any understanding of what is meant by “presently entitled” in the context of s 3A, operating as it does on the facts at hand in the context of a unit trust, must have regard to the qualifications upon the rights of beneficiaries arising under the law of trusts.

114. What rights a beneficiary may have begins with consideration of the rule in Saunders v Vautier. A beneficiary’s right to possession and to the indicia of title may arise when the trustee has no active duties and the beneficiary is sui juris absolutely entitled under the rule in Saunders v Vautier (CPT Custodian, at [43] and [47] and Jacobs Law of Trusts in Australia, 7^th ed, at [2308] and [2312]). Until then, the beneficiary may not compel the trustee to give possession.

115. What a beneficiary of a unit trust has in the nature of a present entitlement within the meaning of s 3A of the LTMA, in my opinion, is not an absolute entitlement of the kind described in Saunders v Vautier but takes its meaning from the context of what the law of trusts gives a beneficiary of a unit trust of a kind that falls within s 3A.

116. In the present case, the entitlements in issue arise pursuant to a unit trust under which the trustee has active duties and can exercise the complement of powers described at [48] and [49] above. As further set out at [50] above, these are not circumstances that allow for entitlements in the nature of ownership of trust property. They give the Unitholder something less.

117. However, not to recognise that a beneficiary is “presently entitled”, simply because an absolute entitlement of the kind arising under the rule in Saunders v Vautier cannot be found, would in my opinion defeat the purpose of s 3A, in its intended application to unit trusts. That entitlement is to be defined having regard to what a beneficiary of a unit trust has in equity, as revealed by the cases. This is an interest of the kind found in CPT Custodian.

118. I have found that no provisions of the Deed raised in the Respondent’s submissions curtail the entitlements described in cl 12.2 or 8.1 in the manner contended by the Respondent. Additionally, there are no provisions in the Deed as amended that limit the times at which the Unitholders can take to particular times, for example on a fixed date at the end of the financial year. In these circumstances, I find that the Unitholders are “presently entitled” in the manner contemplated by s 3A(3B).

Conclusions

119. The Tribunal finds that the Trust satisfies the relevant criteria” set out in s 3A(3B) of the LTMA. As a result, it is taken to be a “fixed trust” and is not a “special trust” within the meaning of s 3A. The assessment under review for the 2025 land tax year should consequently be revoked and the matter remitted to the Respondent for reassessment.

Orders

1. The assessment under review is revoked.

2. The matter is remitted to the Chief Commissioner of State Revenue for determination in accordance with these reasons.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 30 September 2025