Australian Foreign Acquirer Duty
Under Chapter 4 of the Duties Act 2001 (Qld), additional foreign acquirer duty (AFAD) is an extra 3% duty on top of the duty that applies to transactions that are liable for (1) transfer duty, (2) landholder duty or (3) corporate trustee duty. AFAD applies when all the following conditions are met:
- You are an acquirer for the purposes of the transaction and a foreign person.
- Your transaction involves AFAD residential land.
- The liability for your transaction arises on or after 1 October 2016.
AFAD residential land is land in Queensland that is or will be used solely or primarily for residential purposes, where particular conditions are met. AFAD residential land includes:
- homes and apartments
- vacant land on which a home or apartment will be built
- land for residential development, such as
- smaller unit blocks
- housing subdivisions
- major developments with a residential component
- 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.
AFAD residential land does not include land used for hotels and motels.
Foreign Person – You are a foreign person for additional foreign acquirer duty if you are a:
- foreign individual
- foreign corporation
- trustee of a foreign trust.
Foreign individuals – You are a foreign individual if you are not an Australian citizen or permanent resident.
A permanent resident holds a permanent visa, or is a New Zealand citizen with a special category visa, as defined by the Migration Act 1958 (Cwlth).
Foreign corporations – A foreign corporation is one that is:
- incorporated outside Australia; or
- in which foreign persons (or related persons of foreign persons) have a controlling interest of at least 50%.
Related persons include partners in a partnership.
Interests of unrelated foreign persons will be considered when determining whether the foreign persons have a controlling interest in a corporation.
Foreign trusts – A trust is foreign if at least 50% of its interests are trust interests of:
- foreign individuals
- foreign corporations
- foreign trustees
- related persons of any of the above, including partners in a partnership.
‘Trust interest’ is a person’s interest as a beneficiary of a trust, other than a life interest. For a trust that is a discretionary trust, only a taker in default of an appointment by the trustee can have a trust interest (s57 Duties Act).
Assessing AFAD – Additional foreign acquirer duty (AFAD) receives the same treatment as transfer duty, landholder duty or corporate trustee duty in terms of:
- time of liability
- liable parties
Lodging documents – If AFAD applies to your transaction, you must lodge the transaction documents and any required forms within 30 days. Updated forms that include AFAD will be available from 30 September.
Self assessors can use the transfer duty toolkits for information about assessing particular transactions and what forms need to be completed.
Calculating AFAD – Additional foreign acquirer duty for transfer duty is imposed at a rate of 3% of the dutiable value of the AFAD residential land, based on the foreign acquirer’s interest. The GST-inclusive purchase price is used when determining the dutiable value.
AFAD applies whether the AFAD residential land is for investment or non-investment purposes.
Any AFAD payable on the transactions will be added to the transfer duty.
If there are multiple transferees, AFAD applies only to the interests of the foreign acquirers. For example, if there are 3 individual transferees in equal shares but only 1 is a foreign acquirer, AFAD applies to that person’s one-third interest.
If there is more than 1 transaction, they may be aggregated for transfer duty under section 30 of the Duties Act 2001.
The Public Rulings took effect from 1 October 2016.