Australia

Australian State Taxes: Land Tax and Duty Surcharges for Foreign Investors

By Tony Nunes and Jane Harris, Kelly + Partners Chartered Accountants

Investors from outside Australia with interests in Australian real property should check the state taxes in the state or territory in which the property is located.

Each state and territory has different taxes and different definitions of what constitutes a “foreign person”. For example, Revenue New South Wales (NSW) imposes a surcharge land tax of 2% on the taxable value of residential land in NSW owned by foreign persons and a purchaser duty of 8% for foreign purchasers. There is no tax-free threshold applicable to the surcharge. The terms “foreign person” and “residential land” have specific meanings for the purposes of these rules.

Treatment of Trusts

The treatment of trustee owners of Australian property illustrates the differences between the jurisdictions. In NSW and Victoria, a trustee will be deemed to be a foreign person if that trust can nominate a foreign person as a beneficiary, unless an amendment is made to the deed to irrevocably exclude “foreign persons” from being beneficiaries. However, in Queensland, a trustee will only be deemed to be a foreign person if the default beneficiary of the trust (i.e., the beneficiary who is entitled to income if the trustee does not make a determination) is a foreign person. South Australia looks at whether any of the named beneficiaries are foreign persons. If an unnamed person who is a foreign person is within a class of family members, this is not considered when determining if the foreign ownership surcharge applies.

Absentee Owners

NSW, Queensland, Victoria, and the Australian Capital Territory have also introduced “absentee owner surcharges” of between 0.75% and 4% for land owned by individuals or by entities controlled by individuals who are not physically present in Australia. Each of these jurisdictions has different rules regarding the types of land subject to the charge and the definition of an “absentee owner”.


Tony Nunes

Tony Nunes

GGI member firm
Kelly + Partners Chartered Accountants
Advisory, Auditing & Accounting, Corporate Finance, Tax, Fiduciary & Estate Planning
T: +61 2 9933 8866
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: kellypartners.com.au

Kelly + Partners Chartered Accountants is a specialist chartered accounting business that assists private businesses, private clients, and families to manage their business and personal financial affairs. The Kelly + Partners Tax Consulting practice is respected as one of the foremost tax advisory firms in Australia and offers the full range of direct, indirect, and international tax services.

Tony Nunes has over 22 years’ experience in providing tax advice. He has extensive experience in advising clients on issues affecting cross-border transactions, acquisitions, and restructures, and in all aspects of structuring the ownership and financing of corporations and their operations.
Jane Harris

Jane Harris

GGI member firm
Kelly + Partners Chartered Accountants
Advisory, Auditing & Accounting, Corporate Finance, Tax, Fiduciary & Estate Planning
T: +61 2 9933 8866
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: kellypartners.com.au

Jane Harris has over 10 years of experience assisting high-net-wealth and SME clients with taxation matters. She provides clients with structuring, negotiation, and tax legal advice, predominantly in income tax. Jane also frequently advises on the opportunities and risks of operating personal and business affairs through a variety of structures, including trusts.
 


Published: Trust & Estate Planning Newsletter, No. 07, Spring 2021 l Photo: Andrew Bayda - stock.adobe.com

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