Posted by: Tom Wood | Date: 6 September 2016
The Queensland Treasurer has announced that from 1 October 2016, foreign buyers will pay substantial additional transfer duty for purchases of residential real estate in Queensland. The increase is 3% of the value or price paid, which is roughly a doubling of the amount of duty which must be paid.
The increase in duty also applies to landholder duty and corporate trustee duty where the liability arises on and after 1 October 2016.
The changes are known as the Additional Foreign Acquirer Duty (“AFAD”).
The additional 3% duty will apply to –
In the most common scenario, foreign buyers will be liable for the extra duty if they are purchasing residential land and the contract is formed on or after 1 October 2016.
The extra duty will not apply if you are a New Zealand citizen who holds a permanent or special category visa.
A person will otherwise be a foreign acquirer if they are:
Land will be residential land for the purposes of the extra duty if it is land in Queensland that is or will be used solely or primarily for residential purposes (residential test), where particular conditions are met.
Residential land will include:
AFAD residential land does not include land used for hotel and motel purposes.
Other types of residential property (such as retirement villages or student accommodation) may be subject to AFAD if the use of that property meets the residential test.
Please contact us if you are concerned whether the land you are buying will be residential land for the purposes of AFAD.
Yes. The extra duty will only apply to the extent of the foreign acquirer’s interest in the land.
So, in a scenario where there are three buyers, and only one buyer is foreign, the extra duty will only be imposed on the dutiable value of the foreign acquirer’s interest in the land.
A purchase by a foreign acquirer will not attract the Home or First Home concessions to the extent of the extra 3% duty imposed.
However, concessions for homes or first homes may continue to apply to the normal component of any transfer duty imposed.
The extra 3% will also apply to changes of ownership post settlement. For example, the extra 3% duty may be imposed if there are changes in the trust or company so that it becomes a foreign corporation or trustee of a foreign trust within 3 years of purchase.
The changes give the Office of State Revenue an ability to register a charge over the property if the 3% duty is unpaid. The charge becomes a first ranking charge on the property which received priority over any mortgage. This gives the Office of State Revenue significant rights to sell and recover duty that is unpaid.
Due to extent to the changes, please contact our office if you have any concerns about how the new Additional Foreign Acquirer Duty may affect you.