From 1 July 2018, the Queensland Government is set to increase its additional foreigner acquirer duty rate from 3% to 7%. The rate increase was announced in the mid-year fiscal economic review as part of the response to the 2017/18 budget.
Foreign purchasers of residential land in Queensland or of an interest in residential land in Queensland (through shares in a company or units in a unit trust) should consider the timing of their future transactions in light of the proposed increase to the duty rate from 1 July 2018. Transitional arrangements have not yet been announced, so we do not know what rate will apply to contracts signed before 1 July 2018 and settle after (for example).
Additional foreign acquirer duty is in addition to any other duty liability.
Currently South Australia and Victoria charge additional duty for foreign purchasers at 7%, while in New South Wales the additional rate of duty is 8%.
Western Australia has revised its announcement of the introduction of a foreign buyer's surcharge from 4% to 7% from 1 January 2019. This will bring Western Australia in line with the other states.
In a separate announcement, the Victorian Government is proposing to broaden the rules for determining what is a 'foreign corporation' and a 'foreign trust' for the purpose of its additional duty surcharge.
Currently, the rules only allow for the aggregation of foreign persons in a trust or corporation if they are associated persons.
Under the proposed new amendments, which are currently before the Victorian Parliament, aggregation will now occur between all foreign natural persons, foreign corporations and trustees of foreign trusts. This is irrespective of whether or not they are associated persons.
This means that the amendments have the potential to catch those who currently are not liable for the surcharge under the current rules.
What you should do
CGW has a range of tax specialists who can provide specialist advice about whether you will be liable to additional duty and how to minimise your duty liability.
In particular, if you intend to purchase property using a discretionary trust, ask our tax specialists about amending your trust deed (before you sign a contract) so it will not be liable to the additional duty.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.