What steps can be taken to mitigate any exposure?
This surcharge may not apply if the trust deed contains a clause that specifically precludes the trustee from making distributions from the capital of the trust to foreign individuals, foreign corporations or trustees of foreign trusts that otherwise fall within the classes of eligible beneficiaries.
From 1 March 2020, if you are considering purchasing residential property in Victoria, to ensure that you are not liable for the foreign purchaser additional duty, you may consider using a different purchase vehicle (that is not deemed to be a foreign trust), for example by establishing a new trust that specifically excludes foreign persons (explained further below).
Alternatively, where you do intend to purchase residential property in Victoria with an existing discretionary trust (and with no intention of making distributions to foreign persons), you should consider inserting an "exclusion clause" into the trust deed (if it does not have one already) that specifically excludes foreign persons from being potential beneficiaries of the trust.
Any amendment to a trust deed will have to be done prior to the dutiable transaction completing (in other words, prior to settlement).