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Issues for foreign acquirers

Jan 27, 2022 | Article

Issues to be considered for foreign acquirers

  1. FIRB approval
  2. Qld Foreign Ownership of Land Register Act 
  3. the extra Foreign Acquirers duty in Queensland
  4. Land Tax for foreigners
  1. Foreign Investment Review Board. (Federal Law)

Basically foreign non-residents are not permitted to buy existing residential Real Estate, and require FIRB approval for larger or sensitive Commercial purchases.
For more details, please see our last newsletter at Purchasing residential property in Australia as a foreign person.

  1. Foreign Ownership of Land Register (Queensland State Law)

Under the Foreign Ownership of Land Register Act 1988 (Qld), a foreign person who acquires a property in Queensland must complete and lodge with the registrar a notification of ownership unless he/she becomes a personal representative of a deceased person. Failure to register can lead to forfeiture of the Land. This is separate from, and additional to, FIRB Approval.

Who is foreign person (schedule 1 of FLRA, Duties Act s234)? 

  1. a foreign individual
  2. a foreign corporation
  3. the trustee of a foreign trust

The relevant form (Form 25 of Queensland Titles Registry) must accompany Form 1 Transfer, Form 6 Transmission application to a devise/legatee, or Form 7 Lease.

Under the Act, the following event also must be notified to registrar:

  • disposal of interest
  • the person holding interest is no longer a foreign person on 30 June in a year
  • the person holding interest becomes a foreign person on 30 June in a year

Non-compliance of the obligation under the Act may cause you penalties.

If you are unsure whether you are obliged to notify registrar, please contact us.

3. AFAD (Additional Foreign Acquire Duty)

If you are a foreign person purchasing residential property in Queensland, you will be liable for not only transfer duty (stamp duty up to 5%) but also AFAD (Additional Foreign Acquire Duty, an extra 7%; ) under the Duties Act QLD 2001.   YES, that’s right; up to 12% total duty

Who is foreign person?

Under the Duties Act 2001 (Qld), you are a foreign person for AFAD if you are:

  1. a foreign individual
  2. a foreign corporation
  3. the trustee of a foreign trust

You are a foreign individual if you are not Australian citizen or permanent resident. 

A foreign corporation means a corporation incorporated outside Australia or a corporation which foreign persons or his/her family have at lease 50% of controlling interests. 

A trust is a foreign trust if at lease 50% of its interest are trust interests of one of the followings:

  • foreign individual
  • foreign corporation
  • trustee of a foreign trust
  • related persons of any of the above

Note if a Company or trust changes to a non-resident (eg. Change of directors or shareholding), reporting is required

Are you a New Zealand citizen?

If a New Zealand citizen holding a special category visa is not liable for AFAD. However, if a New Zealand citizen not residing in Australia will be liable for AFAD.

AFAD residential land?

AFAD will be applied if you are purchasing AFAD residential land under the Duties Act. AFAD residential land is land in Queensland that is or will be used solely or primarily for residential purposes and where particular conditions are met.

Any of the following applies:

  • residential building (home and apartment) including chattels
  • vacant land on which a residential building will be constructed
  • land for residential development
  • building refurbished, renovated or extended for residential use

If you are unsure whether you are liable for AFAD, please contact us.

4. Land Tax for foreigners

If you are a foreign company or trustee of a foreign trust, a surcharge of 2% on taxable land valued at $350,000 or more applies in addition to the usual land tax rates.

If you have any queries on property purchases or sale on Residential or Commercial Property, please call Peter Lee or Ashley Kim for an obligation free discussion on 07 3186 6666.

Coming Up.  In our next issue of P M Lee & Co. Property News We will cover GST; and Capital Ganis Tax Withholding Taxes