AFAD is an additional 7% transfer duty that applies to foreign acquirers only who purchase residential property in Queensland on or after 01 July 2018. You are considered a foreign person for AFAD if you fall into one of the following categories:
- Foreign individual
You are a foreign individual if you are not an Australian citizen or permanent resident.
You can only be considered a permanent resident of Australia if you are granted a permanent visa that allows you to remain in Australia indefinitely. This means you will still be considered a foreign person for AFAD even if, at the time you enter into the transaction, you hold a kind of visa that provides a pathway to Australian permanent residency. For example, a temporary skill shortage visa subclass 482, a partner visa (temporary) subclass 820, or any kind of bridging visa.
- Foreign Corporation
A foreign corporation is one that is incorporated outside Australia or in which foreign persons (or related persons of foreign persons) have a controlling interest of at least 50%.
The corporation should carefully check the foreign status of its 'related persons'. In particular, 2 corporations are considered related persons if they are related bodies corporate—that is, one of the corporations is a subsidiary, holding company, or subsidiary of a holding company of the other corporation. Further, an individual and a corporation are considered related persons if the individual or a family member is a majority shareholder, director, or secretary of the corporation/the corporation's related body corporate, or if the individual or family member holds a majority interest in the corporation or related body corporate. Related persons also include partners in a partnership.
Interests of unrelated foreign persons will also be considered when determining whether the foreign persons have a controlling interest in a corporation.
- Trustee of a foreign trust
A trust is foreign if at least 50% of its interests are trust interests of foreign individuals, foreign corporations, trustees of a foreign trust, or related persons of any of the above, including partners in a partnership.
If AFAD is not applied to a transaction and within 3 years the transferee acquirer becomes a foreign trust or foreign company, this transferee must lodge all documents with the Commissioner for reassessment within 28 days after the transferee becomes a foreign entity.
Strict imposition of interest and penalty tax may apply for breaches of any of the AFAD rules.
If you have any doubt about your status as a foreign buyer, please take legal advice and guidance before you sign a contract.
