We are often asked what is Additional Foreign Acquirer Duty (AFAD)?
AFAD is applied under the Duties Act 2001 (Act) and is a state based tax that applies to any foreign persons who buy residential land in Queensland.
It is paid in addition to the standard transfer duty and was implemented to ensure foreign persons who purchase residential property and will be the beneficiaries of Queensland government services and infrastructure are also contributing just as a local buyer who have contributed through their taxes.
Residential Land
The definition of residential land in Queensland is land that is or will be used solely or primarily for residential purposes, where particular conditions are met and includes:
- homes and apartments (including chattels)
- vacant land on which a home or apartment will be built
- buildings refurbished, renovated or extended for residential use.
- land for residential development, such as
- smaller unit blocks
- housing subdivisions
- major developments with a residential component
Residential property such as retirement villages and student accommodation are considered on a case by case basis.
It does not include land used for hotels and motels.
There are exemptions for specified foreign retirees if you have purchased you place of residence after 1 January 2023.
Who is a Foreign Person?
A Foreign Person for the purpose of the Act are:
- A foreign individual
- A foreign corporation
- Trustees of foreign trusts
A foreign individual is a person who is not an Australian citizen or permanent resident. A New Zealand citizen who is in Australia on a special category visa is regarded for the purposes of the Act as a permanent resident.
A foreign corporation is where one or more persons who are foreign persons or related persons of foreign persons:
- control at least 50% of the voting power in the corporation
- in a position to control at least 50% of the potential voting power in the corporation or
- have an interest in at least 50% of the issued shares in the corporation
A foreign trust is one where at least 50% of the trust interests in the trust are foreign interests.
A foreign interest is any of the following:
- a trust interest of a foreign individual
- a trust interest of a foreign corporation
- a trust interest of a trustee of a foreign trust
- a trust interest held by a related person of a person mentioned in (a) to (c) above.
A Trust interest is a person’s interest as a beneficiary of a trust, other than a life interest. For a trust that is a discretionary trust, only a taker in default of an appointment by the trustee can have a trust interest.
A taker in default in relation to a discretionary trust is a beneficiary who automatically receives a distribution if the trustee doesn’t exercise their discretion and make a valid distribution to other beneficiaries by a specified deadline.
How much is AFAD?
AFAD is an extra 8% of the normal duty applied under the Act to any purchase.
How can FC Lawyers help?
FC Lawyers experienced property and conveyancing team have acted for hundreds of individual and organisations in relation to their Queensland duty requirements.
Contact our team to discuss your property and foreign investment options.
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