Australia: New duty and land tax surcharges for foreign buyers of land in Australia

New South Wales

Foreign persons purchasing residential real estate in New South Wales will now have to pay a duty surcharge from 21 June 2016 and land tax surcharge from and including the 2017 land tax year, in measures announced in this week's State Budget.

The Treasurer also announced that foreign investors will no longer be entitled to the 12 month deferral for the payment of stamp duty for off-the-plan purchases of residential property. Foreign persons will not be provided with a tax-free threshold for the land tax surcharge, nor will there be an exemption for the principal place of residence.

This brings New South Wales into line with the other States on the eastern seaboard.


From 1 July 2016, the State Government is proposing that Victoria will have a 7% foreign investor surcharge on residential stamp duty (increasing from the current 3%). From 1 January 2017, it is also expected that the existing 0.5% land tax surcharge will increase to 1.5%.


Queensland also recently announced a 3% duty surcharge on the foreign acquisition of residential property, with effect from 1 October 2016.

As a result, foreign entities should carefully check the jurisdiction specific requirements for surcharge duty and land tax before entering into new transactions.

Duty surcharge at a glance Rate of duty surcharge

New South Wales: 4% surcharge from 21 June 2016.

Victoria: 7% surcharge proposed from 1 July 2016 (increasing from 3%).

Queensland: 3% from 1 October 2016 - known as AFAD (Additional Foreign Acquirer Duty).

Type of property affected

New South Wales: Residential-related property, which includes:

  • residential land in New South Wales;
  • an option to purchase residential land in New South Wales (including nominations or assignment of the option).

Residential land includes:

  • a parcel of land on which there are one or more dwellings;
  • a strata lot;
  • a utility lot;
  • a parcel of vacant (or substantially vacant) land that is zoned for residential purposes,

but does not include any land used for primary production.

The definitions of "residential-related property" and "residential land" are complex and the above summary is intended as a guide only.

Victoria: For contracts entered into on or after 1 July 2015 but before 1 July 2016, residential property is either:

  • land that has a building on it; or
  • and that is vacant but on which a foreign purchaser intends to construct a residential building.

For contracts entered into on or after 1 July 2016, it is proposed that residential property include:

  • land;
  • and which includes a building, or part of a building, that a person intends to refurbish or extend;
  • and on which a person intends to construct a building;
  • and in respect of which a person has undertaken or intends to undertake land development for the purposes of constructing a building,

to be used solely or primarily for residential purposes and which may lawfully be used in that way. Some exceptions are expected to apply for commercial residential premises, residential care facilities, supported residential services and retirement villages.

Queensland: 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;
  • an existing building will be renovated to be a house or apartment complex,

or development land in respect of any of the above.

Who does it affect?

New South Wales: A foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified for individuals by the Duties Act (section 104J), being:

  • an individual not ordinarily resident in Australia (except for Australian citizens or a New Zealand citizen who holds a Special Category Visa (Subclass 444)); or
  • a corporation or trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest (20%); or
  • a corporation or trustee of a trust in which two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest (40%); or
  • a foreign government; or
  • any other person, or any other person that meets the conditions, prescribed by the Foreign Acquisition and Takeovers Regulation, which includes a foreign government investor.

Victoria: Foreign purchasers, who are foreign natural persons, being persons who are not:

  • citizen or permanent residents of Australia; or
  • New Zealand citizens with a Special Category Visa (Subclass 444).

Foreign corporations, including:

  • corporations incorporated outside Australia; and
  • corporations incorporated in Australia if a foreign natural person, another foreign corporation or a trustee of a foreign trust and their associates have a controlling (> 50% or the ability to control) interest in the corporation.

Trustees of a foreign trusts, being trustees of trusts in which a substantial interest (>50% or the ability to control) is held by a foreign natural person, a foreign corporation or the trustee of another foreign trust and their associates, noting that any foreign beneficiary of a discretionary trust will be deemed to hold the maximum interest in the trust that the trustee has power to distribute to it.

Queensland: Foreign persons are:

  • 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?

New South Wales: Yes. An 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.

Victoria: Yes. Any acquisition by a foreign purchaser of an interest in a landholder which has an interest in residential property will be subject to the surcharge where the acquisition is otherwise dutiable.

Queensland: 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 it apply?

New South Wales: Surcharge duty transactions entered into on or after 21 June 2016.

Victoria: Contracts entered into (or relevant acquisitions made) on or after 1 July 2015.

Queensland: Contracts entered into on or after 1 October 2016, whether or not pursuant to a pre-existing option.

Land tax surcharge at a glance Rate New South Wales
  • 1.5% surcharge from 2017 land tax year
  • No tax-free threshold for the surcharge
  • No principal place of residence exemption
  • 0.5% from 1 January 2016
  • 1.5% proposed from 1 January 2017

No land tax surcharge to be applied in Queensland

Type of property affected

New South Wales: Surcharge land tax is payable in addition to any land tax payable in respect of the residential land under the other provisions of this Act, and is so payable even if no land tax is payable under those other provisions.

Residential land has the same meaning as for the amendments to the Duties Act for the surcharge duty.

Victoria: All land subject to land tax in Victoria.

Who does it affect?

New South Wales: The land tax surcharge applies to the same foreign persons as the surcharge duty.

Victoria: "Absentee persons", being:

  • A natural person absentee: a person that is not an Australian or New Zealand citizen or a permanent resident of Australia, who does not ordinarily reside in Australia;

An absentee corporation: a corporation incorporated outside Australia or a corporation in which an absentee person, or that person together with another absentee person, has a controlling interest; or

A trustee of an absentee trust: a trust that has at least one absentee beneficiary.

When does it apply?

New South Wales: From midnight on 31 December 2016

Victoria: From 1 January 2016.

Responding to the duties surcharge

Purchasers of residential land in NSW, Victoria and Queensland should carefully consider whether they are "foreign" for the purpose of the relevant jurisdiction and, if so, whether the surcharge will apply to the land or interest being acquired.

If the surcharge applies, purchasers will then need to carefully consider what consequences this might have on the purchase price and the transaction structure more generally (for example, nominations or assignments of options to purchase residential land).

In Victoria and Queensland, purchasers should also consider whether they are eligible for a discretionary exemption from the Commissioner. For example, in Victoria, the Treasurer and Commissioner have discretion to exempt persons where the activities of the entities they control or have a substantial interest are involved in the development or re-development of property that adds to the supply of housing stock in Victoria. There is currently no similar exception in NSW, although it is anticipated that there may be a similar process in Queensland.

Queensland retains the lowest duty rate on the East Coast, and moreover there is still a window of opportunity to invest in Queensland property without the duty surcharge applying until 1 October 2016.

Responding to the land tax surcharge

Purchasers of residential land in NSW and Victoria will also need to consider the long-term holding costs for residential land (in NSW) and all land subject to land tax (in Victoria) having regard to the stamp duty surcharge.

In NSW, for residential developers, along with the abolition of the 12 month deferral for the payment of stamp duty for off-the-plan purchases of residential property, two other changes could have an impact on off-the-plan sales: the abolition of both principal place of residence exemption and the tax free threshold for land tax for foreign persons.

If we can assist you in relation to any of the above, or any other business, please refer to our contacts below.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.