Stamp Duty, Land Tax and Vacancy Fee - Foreign Owners
The last few years has seen the implementation of a range of new stamp duty and tax changes in Australia largely focused on foreign investors and, more recently, "absentee" owners. Currently, Australian citizens and permanent residents working overseas are not caught by the new provisions, following the repeal of some particularly harsh provisions in Queensland in 2019.
Australian expats still need to be broadly aware of these provisions because at least one State appears to have simply invoiced all property owners with an overseas contact address on the basis that they are subject to the "foreigner" absentee land tax provisions - regardless of the owners being Australian citizens or permanent residents. Additionally, many expats buy Australian property with foreign spouses and consequently there may be a partial exposure. You should seek professional advice confirming any exposure, prior to making or challenging any payment demands.
Stamp Duty and Land Tax
We have provided a summary of stamp duty and absentee land tax surcharge payments below - these are payable in addition to standard stamp duty and land tax. To stress, Australian citizens working abroad are currently not liable to pay any stamp duty or absentee land tax surcharges.
|State||Stamp Duty Surcharge
(On property purchase)
|Absentee Land Tax Surcharge|
|New South Wales||8% from 1/7/17
|2.0% from 1/7/17
|Victoria||8% from 1/7/19||2% from 1/1/20
|Queensland||7% from 1/7/18
2.0% from 30/6/19
|Western Australia||7% from 1/1/19||Nil|
|South Australia||7% from 1/1/18||Nil|
|Tasmania||8% from 1/4/20||Nil|
|ACT||Nil||0.75% surcharge from 1/7/18|
A more detailed summary is available for download below of how we believe the stamp duty and land tax provisions apply across Australia in 2023. The situation is complex and dynamic, changing regularly, and the material is intended only as general background and is not to be relied upon - professional advice is strongly recommended.
The NSW Government has announced that first home buyers purchasing properties for up to $1.5 million will be able to choose [from January 16, 2023] to pay an annual property tax instead of stamp duty. The property tax will only be payable by first home buyers who choose it, and will not apply to subsequent purchasers of a property."
An annual Vacancy Fee is payable by foreign owners of residential property if their Australian property is not "residentially occupied or genuinely available on the rental market" for at least 183 days in a 12 month period. The vacancy fee applies to foreign persons who made a foreign investment application to purchase residential property on or after on May 9, 2017 and requires them to lodge an annual vacancy fee return.
For the purpose of the vacancy fee, foreign owned residential property is considered, "residentially occupied, or genuinely available on the rental market", if:
- the property owner, or a relative of the owner, genuinely occupied the property as a place of residence; or
- the property was genuinely occupied as a place of residence subject to a lease or licence with a term of at least 30 days; or
- the property was made genuinely available as a place of residence on the rental market, with a contract term of at least 30 days.
Note that properties made available for short-term leases of less than 30 days (including via web-based vacation rental sites such as Airbnb) do not meet the above criteria.
There are a number of situations where a foreign person may be exempt from being liable for a vacancy fee, including where legal ownership of the property has changed during the year, property has been undergoing substantial repairs or renovation, the property is part of an estate being administered, etc., and, should a property cease to be owned by a foreign person during the course of a vacancy, the vacancy fee obligation will cease to apply.
As regards the amount of the fee, it will generally be equivalent to the residential land application fee that was paid by the foreign person at the time the application for FIRB approval to purchase the property was made. The current minimum (July 2022) fee is $13,200 for applications involving the purchase of property valued at $1million or less.
We believe there may be a significant under-reporting in this area and non-compliant foreign owners are risking substantial penalties.
If you would like to arrange professional advice please complete the Inquiry form below providing details and you will be contacted promptly.