Who is a foreign acquirer?
If you are looking to purchase a residential property in Queensland, you should consider you fall are considered a ‘foreign acquirer’.
The description of a ‘foreign acquirer’ includes a person who does not ordinarily reside in Australia, does not hold the relevant permanent Visa or who is not an Australian citizen.
A foreign acquirer may also be a foreign corporation with foreign persons holding a controlling interest in a corporation that was incorporated outside of Australia. This also includes the trustee of a foreign trust where 50% or more of the trust interests are foreign interests.
An individual who is an Australian citizen or permanent resident (including people who hold a permanent visa, or New Zealand citizens who hold a special category visa) will not be classed as a foreign acquirer.
What is Additional Foreign Acquirer Duty (AFAD)?
Additional Foreign Acquirer Duty is an additional duty payable by a foreign acquirer to the Office of State Revenue for residential transactions which require transfer (stamp) duty.
Residential land in Queensland includes land that is used solely or primarily for residential proposes excluding land used for hotel and motel purposes.
AFAD will apply only to the foreign person’s portion of interest in the transaction. This means that if you are a foreign acquirer and you are purchasing a residential property jointly with an Australian citizen or permanent resident, the AFAD will be calculated on the 50% interest you will hold in the property.
Residential land purchases in Queensland by foreign persons incur the additional foreign acquirer duty at the following rates:
- 3% of the residential property purchase price where the transaction’s liability for transfer duty arises between 1 October 2016 and 30 June 2018; or
- 7% of the residential property purchase price where the transaction’s liability for transfer duty arises on or after 1 July 2018.
The Queensland Government introduced the Additional Foreign Acquirer Duty to ensure foreign acquirers of residential property in Queensland contribute towards the benefit they receive from government services and infrastructure.
What is the Foreign Investment Review Board (FIRB)?
The Foreign Investment Review Board receives applications from foreign acquirers who wish to purchase residential property for investment purposes. The Foreign Investment Review Board then provide the Treasurer and Government on Australia’s Foreign Investment Policy with advice relating to proposed investments in Queensland.
A foreign acquirer may be required to obtain Foreign Investment Review Board approval for each proposed purchase of residential property in Queensland. It is important to note that there is an application fee involved which is calculated on the purchase price of the investment property.
Integrated Tourism Resort Exemption
There are exemptions available for foreign acquirers purchasing residential property in an integrated tourism resort. An integrated tourism resort is a development comprised of accommodation, recreation and commercial facilities which was planned and constructed by a single developer.
Foreign acquirers seeking an exemption for Foreign Investment Review Board approval, on or after September 1999, must purchase residential property within an integrated tourism resort subject to the following conditions:
- The developed residential property is subject to a lease of 10 years or more to the resort operator;
- The developed residential property is available as tourist accommodation when it is not occupied by the owner; and
- The acquisition is consistent with any conditions imposed on the integrated tourism resort at that time.
In Queensland, the following resorts are considered integrated tourism resorts:
- Hamilton Island Resort, Whitsunday Passage, Queensland
- Hope Island Resort, Hope Island, Queensland
- Hyatt Regency Resort, Coolum, Queensland
- Kooralbyn Valley Resort, Queensland
- Laguna Quays Resort — Stage 1, Repulse Bay, Queensland
- Mirage Port Douglas Resort, Port Douglas, Queensland
- Palm Cove Travelodge Resort, Queensland
- Royal Pines Resort, Ashmore, Queensland
- Sanctuary Cove, Hope Island, Queensland
- Kingfisher Bay Resort Village, Fraser Island, Queensland
Foreign Investment Review Board Exemption Certificates
An exemption certificate will provide a foreign investment acquirer with the opportunity to apply for and present offers on multiple properties within Queensland on the condition that they only proceed with one residential property purchase.
There are conditions involved with approval for a Foreign Investment Review Board exemption certificate:
- The foreign investment acquirer will enter a 12-month exemption period from the date of approval to apply for and present offers on multiple properties;
- The purchase price of the residential investment properties applied for will be limited according to each foreign acquirer’s certificate;
- The certificate will only be valid in a particular state or territory;
- You must register the property on the ATO Land and Water Register no later than 30 days after settlement; and
- There are further standard conditions applicable to each property type including established dwellings, new dwellings and vacant land.
Key Points to Note
- If you are looking to purchase residential property in Queensland, consider whether you are classed as a foreign acquirer.
- If you are a foreign acquirer, you may be liable to pay an additional foreign acquirer duty on your purchase.
- If you are a foreign investment acquirer, you may be required to apply to the Foreign Investment Review Board before you enter a contract to purchase residential property in Queensland.
- Additional Foreign Acquirer Duty and Foreign Investment Review Board approval are separate requirements, if you are purchasing property in an integrated tourism resort, you may still be required to pay an additional foreign acquirer duty.
- You may be eligible to apply for an exemption for Foreign Investment Review Board approval for each residential investment property you apply for.
As always, Affinity Lawyers have an experienced and professional team in place ready to assist with any of your conveyancing needs, so feel free to telephone our Gold Coast office today on 07 5563 8970 to discuss your specific requirements.