Changes to land tax and stamp duty are in effect, however the laws are slightly different for each state. These taxes are primarily targeted towards foreign purchasers and foreign owners, but if you have a property in a discretionary trust or wish to buy a property in an existing trust then these surcharges may affect you. For example, if a specified beneficiary of the trust is not an Australian citizen or does not ordinarily reside in Australia, then the tax surcharges will apply. If this is the case, the deed can be amended to restrict a trustee from being able to distribute any trust property for the benefit of a foreign person. If you believe these matters may affect you or have any queries, please contact the office.
Outlined below are the surcharges for NSW and Victoria:
NSW
Foreign purchaser additional duty 8% (applies to all properties in addition to existing duty)
Foreign owners land tax surcharge 2% (applies to residential property only; it is over and above all other lands tax)
VICTORIA
Foreign purchaser additional duty of 8% (over and above 5.5% applicable to all properties)
Absent owners land tax surcharge 2% (over and above all other land tax)
The absent owners land tax surcharge applies to both residential and commercial property in Victoria but only to residential property in NSW.
The three conditions outlined below need to be met to be considered an “absentee person”:
- Not an Australian citizen or resident
- Doesn’t ordinarily reside in Australia
- Was absent from the country for at least six months of the year preceding 31 December.
Furthermore, a separate vacant residential property surcharge of 1% is applied to particular Melbourne inner city suburbs. This occurs if the property is unoccupied for more than six months in the preceding calendar year. A list of the regions that this applies to can be found in the link below.
For a more detailed explanation of these taxes, please click the following link:
https://www.pwc.com.au/tax/assets/stamp-duty/pdf/pwc-land-tax-in-victoria-june-2019.pdf
<Author: Sam Pryor>