FAQ on foreign purchaser duty | Wilson & Assoc Chartered Accountants

FAQ on Foreign Purchases Duty

Q1. What is Foreign Purchases Duty?

Foreign Purchases Duty is a surcharge levied on foreign buyers purchasing residential property in Australia. This duty is in addition to the standard stamp duty that applies to property purchases.

Q 2. Does apply to all foreign purchases?

Generally, commercial properties are exempt from surcharge purchaser duty.

Q3. Who is considered a foreign purchaser?

A foreign purchaser is any individual, corporation, or trust that is not a permanent resident or citizen of Australia. This includes temporary visa holders, foreign corporations, and trustees of foreign trusts.

Q4. How much is the Foreign Purchases Duty?

As of the latest update, the Foreign Purchases Duty is an additional 8% of the dutiable value of the property. This is charged on top of the usual stamp duty rates.

Q5. Are there any exemptions or concessions for the Foreign Purchases Duty?

Certain foreign buyers are exempt from the Foreign Purchases Duty. These include NZ citizens, or

  • Exempt permanent residents
  • Retirement visa holder (subclass 405 or 410)
  • Partner visa holders (subclass 309 or 820)

Individuals fitting the above categories also need to meet the following requirements:

  • Live in the purchased property for a continuous 200 days within 12 months of the property purchase contract date
  • The property is their principal place of residence, and
  • The property is bought under the name of the individual, not a company or trust.

 

Q6. How is the Foreign Purchases Duty calculated?

In NSW, the duty is calculated as 8% of the dutiable value of the property, which typically includes the purchase price or market value of the property, whichever is higher.

Q7. When is the Foreign Purchases Duty payable?

The duty must be paid within three months from the date of the property transfer agreement. Failure to pay on time may result in penalties and interest charges.

Q8. How do I pay the Foreign Purchases Duty?

The duty can be paid through the NSW Revenue Office’s online payment system, at authorized financial institutions, or via other payment methods specified by the NSW Revenue Office. Detailed payment instructions are usually provided at the time of assessment.

Q9. Can I get a refund if I paid the Foreign Purchases Duty by mistake? If you believe you have been incorrectly charged the Foreign Purchases Duty, you can apply for a reassessment or refund through the NSW Revenue Office. Supporting documentation and evidence will be required to process the refund request.

Q10. Is the Foreign Purchases Duty the same across Australia?

The Foreign Purchases Duty differs from state to state.

New South Wales (NSW)

•   Rate: 8% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Few exemptions; consult with NSW Revenue Office for specific cases.

Victoria (VIC)

•   Rate: 7% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Some exemptions may apply, particularly for certain types of development or business use.

Queensland (QLD)

•   Rate: 7% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Specific exemptions are limited; refer to the Queensland Treasury for details.

Western Australia (WA)

•   Rate: 7% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Generally no exemptions for residential properties.

South Australia (SA)

•   Rate: 7% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Few exemptions available.

Tasmania (TAS)

•   Rate: 8% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Limited exemptions, primarily focused on certain investment properties.

Australian Capital Territory (ACT)

•   Rate: 8% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Limited exemptions; refer to the ACT Revenue Office for specifics.

Northern Territory (NT)

•   Rate: 8% of the dutiable value of the property.

•   Applicable: To all residential properties purchased by foreign buyers.

•   Exemptions: Few exemptions; detailed information available from the Northern Territory Revenue Office.