Surcharge Purchaser Duty for Foreigners in NSW

 

The 2016 NSW Budget introduced a four per cent surcharge purchaser duty (surcharge) on the purchase of residential real estate by foreign persons from 21 June 2016. Further to this, the 2017 NSW Budget, increased the surcharge rate from four per cent to eight per cent for agreements entered into on or after 1 July 2017.

The surcharge is in addition to the duty payable on the purchase of residential property. The surcharge does not apply to Permanent visa holders, New Zealand citizens who hold a special category visa (subclass 444) or Partner (provisional) visa holders (subclass 309 or 820).

However, it does apply to persons who are, the three types of individuals listed above, who do not meet the 200 day rule (200 days or more in Australia immediately prior to the contract date) or temporary visa holders, who are persons who hold Australian temporary visas which are subject to limitation, such as an end date, and are considered to be foreign persons, regardless of whether they meet the 200 day rule. Unfortunately, this cannot be overcome by the incorporation of a company or establishment of a trust.

A corporation and a trustee of a trust can be a foreign person in the following circumstances:

  • a corporation in which is an individual not ordinarily resident in Australia; or
  • a foreign corporation or a foreign government holds a substantial interest; or
  • a corporation 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; or
  • the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or the 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; or
  • a foreign government; or
  • a general partner of a limited partnership where:
  • an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds at least 20 per cent in the limited partnership, or
  • 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 interest of at least 40 per cent in the limited partnership.

Should you be considering purchasing property in NSW and are unsure if the Surcharge Purchaser Duty applies to you, feel free to call Nicole on 9328 6917 for a consultation.

Article by: Nicole Leggat

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