Foreign Buyers Stamp Duty Surcharge
From 1 October 2016 the foreign persons acquiring residential land in Queensland will pay a 3% stamp duty surcharge on entering into any new transactions.
What is Residential Land?
Residential land is land that is or will be solely or primarily used for residential purposes, and on the land:
- there is or will be a building designed or approved by a Council as a single family residence;
- there is or will be a number of lots in a strata title building; and
- an existing building will be renovated to be a house or apartment complex,
Who are Foreign Persons?
- Individuals who are not Australian citizens or permanent residents (including the Subclass 444 visa New Zealanders);
- Companies incorporated outside Australia, or Australian companies in which foreign persons have an interest of 50% or more; and
- A trust where 50% of the “trust interests” are held by foreign persons. For a unit trust this will simply mean looking at the unit register, and in the case of discretionary trusts, identifying the “takers in default” to see if any are foreign persons. The trust interest is simply the proportion available to each taker in default – in a case where there were two takers in default, if one was a foreign person the trust would be a foreign person also.
Are Indirect Acquisitions Caught?
Yes. Any acquisition by a foreign person of an interest in a landholder which has an interest in residential land will be subject to the surcharge where the acquisition is otherwise dutiable.
When Does AFAD Apply?
It applies to any contracts entered into on or after 1 October 2016, whether or not pursuant to a pre-existing option.
How is AFAD calculated?
Under section 244 of the Act, AFAD is imposed at the rate of 3% on the dutiable value of the transaction (usually the purchase price) to the extent of the foreign person’s interest in the AFAD residential land. For example, if a foreign person acquires a residential home for $1 million, they would need to pay an additional $30,000 in AFAD on top of their usual transfer duty liability.
- Where AFAD applies, the top marginal rate of duty in Queensland will be 8.75%.
Within 30 days of a transaction to which AFAD applies, the foreign acquirer must lodge an AFAD statement in the approved form with the Queensland Office of State Revenue. A failure to lodge this statement is an offence.