Queensland Government Imposes More Tax on Property Transactions

The Queensland Government, whose coffers have been left somewhat bare, due to the downturn in the resources sector, is looking to residential property to help fill the gap.

It is targeting overseas purchasers of residential property through a 3% Additional Foreign Acquirer Duty (AFAD) that came into effect on October 1 via provisions of the Duties Act 2001.

The duty applies to transactions that are liable for transfer duty, landholder duty or corporate trustee duty when the acquirer is a foreign person, a foreign-owned corporation or trustee of a foreign trust, and the deal is for land utilised, or earmarked, solely for residential purposes. It is levied on the dutiable value of the land, based on the foreign acquirer’s interest and the GST-inclusive purchase price is used in determining dutiable value.

AFAD applies whether the land is for investment or non-investment purposes and it is added to the transfer duty applicable to a transaction. If there are multiple transferees, AFAD applies only to the interests of the foreign acquirers. A transaction must be reassessed to impose AFAD within three years of the liability date if the acquirer was a corporation that becomes a foreign corporation or if a trustee was an acquirer and becomes a foreign trust.

AFAD applies to houses and apartments, vacant housing sites, major developments with residential components and buildings refurbished, renovated or extended for residential use. Other types of residential property, such as retirement villages and student accommodation, are considered on a case-by-case basis, and hotel and motel accommodation is excluded.

AFAD receives the same treatment as transfer duty, landholder duty or corporate trustee duty in terms of time of liability, liable parties, notification, lodgement and stamping. Transaction documents and forms must be submitted within 30 days.

Introduction of the duty comes in the wake of Victoria implementing a foreign investor tax last year. The Queensland Government move was strongly opposed by the Property Council of Australia, which views the duty as a tax on job-generating developments.

Concerns were raised by the Property Council and the Queensland Government put in place a relief framework to minimise negative impact. Australia-based companies that are foreign-controlled will be able to seek relief from the 3% stamp duty surcharge if they can demonstrate that they are a significant developer or that they are undertaking significant development.

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