From the 2025 land tax year (1 January 2025), the NSW Government will increase the rate of the foreign purchaser duty surcharge from 8% to 9%.

The foreign resident duty surcharge is levied on foreign buyers of residential property in NSW, with various exemptions available. This includes Australian incorporated property developers (and trustee companies) being able to seek a refund of the surcharge paid within 12 months of a sale of a home on residential land or sale of a residential lot, if the land has been held for less than 10 years.

From January 2025, the NSW Government will also increase the surcharge rate of land tax applied in addition to land tax rates for foreign persons, foreign companies, trustees of foreign trusts, from 4% to 5%.

Existing exemptions continue to be available from the land tax surcharge, including Australian developers being able to seek a refund (where eligibility requirements are met).

For further information we have released a summary about the different state foreign owner surcharge land taxes and duties.

How can SW help?

SW has considerable experience in assisting foreign investors to determine the most favourable state or territory to invest in property developments. This includes advising on refunds or exemptions for property developers, build-to-rent concessions, the availability of exemptions and ex gratia relief from surcharges, and the specific advantages and disadvantages of different property assets.

If you would like any further information, please contact a member of the SW tax team.

Contributors

Robert Parker

Eric Lay

The post NSW Budget | foreign owner duty & land tax surcharges appeared first on SW Accountants & Advisors.

The Queensland Government will increase the rate of the additional foreign acquirer duty (AFAD) from 7% to 8% from 1 July 2024,

AFAD is levied on foreign buyers of residential property in Queensland, with ex gratia relief offered to Australian-based foreign entities whose commercial activities involve significant developments by adding to the supply of housing stock in Queensland (subject to eligibility requirements).

From July 2024, the Queensland Government will also increase the surcharge rate of land tax applied in addition to land tax rates for foreign companies, trustees of foreign trusts and absentees, from 2 %to 3%.

Ex gratia relief from the land tax surcharge will continue to be offered for Australian-based foreign entities whose commercial activities make a significant contribution to the Queensland economy and community (subject to eligibility requirements).

For further information we have released a summary about the different state foreign owner surcharge land taxes and duties.

Concluding remarks

While the increased rate of the AFAD will bring Queensland in line with Victoria and New South Wales’ foreign owner transfer duty surcharge rates, Queensland’s increased foreign owner land tax surcharge will still be more generous than other states.

How can SW help?

SW has considerable experience in assisting foreign investors to determine the most favourable state or territory to invest in property developments. Given foreign owner transfer duty surcharge rates are becoming more uniform across Australia, it may become less clear what are the specific advantages in investing in specific states and territories. However, other drivers that are still relevant to structuring foreign investments in specific states and territories include build-to-rent concessions, the availability of exemptions and ex gratia relief from surcharges, and the types of property assets that will be invested in.

If you would like any further information, please contact a member of the SW tax team.

Contributors

Eric Lay

The post QLD Budget | Foreign owner duty & land tax surcharge appeared first on SW Accountants & Advisors.

UPDATE – 29/05/23

On 29 May, Revenue NSW released an update on the foreign owner surcharge, following their announcement on 21 February. Revenue NSW identified four furthe countries as additional nations that have international tax treaties with the Federal Government: India, Japan, Norway, and Switzerland.

Citizens from these countries will no longer be required to pay surcharged purchaser duty or surcharge land tax. The refund period has been extended for purchasers/transferees and landowners from these countries who paid surcharge duty or surcharge land tax on or after 1 January 2021 (previously 1 July 2021).

SW previously noted that other states may follow the NSW lead. At this time, the Victorian State Revenue Office has advised that it will continue to apply the surcharge to all foreign purchasers and absentee owners, and Queensland has taken no action.

ORIGINAL – 24/02/23

Revenue NSW has identified that the surcharge purchaser duty and foreign owner surcharge land tax provisions are inconsistent with international tax treaties entered into by the Federal Government with New Zealand, Finland, Germany and South Africa.

Effective immediately, citizens of these countries purchasing residential-related property (in their own capacity) will no longer be required to pay NSW foreign owner surcharge duty or foreign owner land tax surcharges on those properties. Foreign owner surcharges are significant – currently the stamp duty surcharge is 8% of dutiable value and the land tax surcharge is 4% from the 2023 land tax year onwards.

Surcharge tax liabilities for non-individuals, such as corporations, trusts or partnerships that arise because of an entity’s affiliation with these nations may also be affected by the international tax treaties.

Refunds may be available where surcharge taxes have been paid by investors from these countries from 1 July 2021 onwards. 

Surcharge taxes and International Tax treaties

Certain international tax treaties entered into between Australia and other relevant countries contain a non-discrimination provision. Broadly, the intent of these provisions is to ensure that a resident of the other treaty country is not subjected in Australia to any tax which is more burdensome than that imposed on an Australian resident. This is typically limited to federal taxes, such as income tax and fringe benefits tax.

However, the treaties entered into between Australia and the now exempted countries (New Zealand, Finland, Germany and South Africa) provide a more encompassing non-discrimination provision which broadly applies to taxes of every kind imposed by Australia – which would include state taxes such as land tax and duty.

In this regard, Revenue NSW have conceded that the current NSW surcharge provisions are contradictory to the tax treaty applying to these countries.

Implications for other nations

It is not yet known how the recent changes will impact on residents from other countries. There may be other international treaties with non-discrimination provisions which may also need to now be considered in light of these changes.

Application for refunds

Revenue NSW have stated that they will proactively identify customers and transactions that may be eligible for the removal of surcharge purchaser duty and surcharge land tax. Where a transaction has been identified for the removal of surcharge taxes, a Revenue NSW representative will contact the relevant person to make arrangements for the payments to be refunded.

To ensure you are eligible for the refund, Revenue NSW will require a certified copy of your current passport or citizenship certificate. Once this information has been received, refunds will be processed within 28 days. 

If Revenue NSW does not contact you and you believe that you may be eligible for a refund, you can contact Revenue NSW directly in relation to the matter. If you require assistance with the application for a refund, please reach out to us at SW.  

Action from other states

The Victorian State Revenue Office has stated that it has taken note of the changes in NSW and is currently considering the implications of this in relation to surcharge taxes in Victoria.

At the time of writing no other revenue office has commented on this matter, however, the relevant DTAs would potentially apply to surcharges imposed by all Australia States, and further announcements may follow.  

How SW can help 

In some cases, property owned by a Trust or company may be considered for the refund where the foreign citizen of these countries has a substantial interest in the entity.

If you need any assistance determining whether you are eligible for a refund or how the surcharge taxes will apply to you going forward, please reach out to us.

Contributors

Robert Parker

Carmelin De Francesco

The post NSW removes foreign owner property taxes for certain countries appeared first on SW Accountants & Advisors.

Most States across Australia tinkered with their foreign owner land tax and duty regimes as part of their last budget. None of these changes were good for foreign investors. These changes mainly impact residential property but they also impact on commercial property in some states.

We have updated our tables to summarise the foreign owner land tax and duty surcharges that apply in Victoria, New South Wales, Queensland, Australian Capital Territory (foreign purchaser land tax only), South Australia (foreign purchaser duty only), Western Australia (foreign purchaser duty only) and Tasmania (foreign purchaser duty only):

Foreign owner land tax surcharges

Foreign owner duty surcharges

Most States provide an exemption for Australian based foreign owners who are significant developers or make significant contributions to the State’s economy.

Foreign owners who would like to consider their eligibility for exemption from these surcharges should contact either Stephen O’Flynn or Abi Chellapen.

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