Virtually all Australian states and territories have introduced separate regimes that operate to impose additional surcharge duty (effectively a tax) on the direct and indirect acquisition of land in Australia by foreign persons. Generally, residential land and in some cases land that may become residential land, is potentially subject to the surcharge regimes. The surcharge is in addition to the standard duty that is charged on the direct or indirect acquisition of land whether the acquirer is foreign or not. Both the surcharge and standard duty impost are generally charged on a sliding scale with reference to the market value of the property or the consideration payable for the property – whichever is highest.

An additional annual charge, known as ‘land tax’, may also be imposed on land held by foreign persons. This annual charge (if applicable) is in addition to the standard land tax impost. Advisers new to the Australian taxation landscape quickly discover that the duty and land tax regimes are NOT uniform across Australia. An adviser must consider the specific rules applying to the Australian state or territory that is relevant for the transaction. 

The relatively new rules can be a minefield to navigate even for Australian based advisers with significant taxation experience. For overseas advisers with clients considering investing in Australian property, whether by a direct transfer of land, the acquisition of shares or otherwise, the rules are particularly complex.

If you have clients who are seeking advice on tax and duty in Australia, contact Fletch or Rosalie at Cooper Grace Ward.