Foreign Ownership of Land in Queensland
Conveyancing in Queensland is complex and is affected by at least 20 different pieces of State and Federal legislation, Contract conditions, extensive case law and practice guidelines. This is made particularly complex if you are a foreign purchaser. We examine some of the additional requirements and duties conferred upon foreign buyers of residential land in Queensland.
Before you buy
As a foreign individual or foreign Corporation, you must first apply for approval from the Foreign Investment Review Board (FIRB) before buying any property in Australia. FIRB is a non-statutory body established in 1976 to advise the Treasurer on foreign investment policy. FIRB serves only to advise the Treasurer. The responsibility rests with the Treasurer when granting or denying approval for foreign investment.
Exemptions to FIRB approval
You will not be required to apply to FIRB for approval provided your purchase meets all of the following criteria:
- You are buying property in which you will reside together with your spouse or de facto partner;
- Your spouse or de facto partner must be an Australian citizen or permanent resident;
- You must hold the property together with your spouse or de facto partner as joint tenants. It cannot be held as tenants in common.
It is important to note that just because you are exempt from seeking approval from FIRB, does not mean you are exempt from paying Additional Foreign Acquirer Duty
When to apply
You can apply to the Foreign Investment Review Board for approval prior to entering into the Contract of Sale or it can be done once you already have a Contract in place. An important factor to consider when purchasing property is that approval from FIRB can take up to 30 days from the date the application fee is paid. If you do not have FIRB approval prior to entering into a Contract, you may wish to consider inserting a special condition to protect yourself in the instance that FIRB approval is not granted.
How to Apply
You can apply for FIRB approval by downloading and completing their online application form. There are fees associated with applying to FIRB for approval and are generally payable at the time the application is made.
The fees payable in making an application to FIRB will depend on the purchase price. Fees for residential land start at $13,200.00 for any acquisition under $1,000,000.
Other potential fees to consider when buying residential property as a foreigner is the application of an annual vacancy fee. An annual vacancy fee is applied where residential property is not residentially occupied for more than 6 months of the year. You will need to ensure that you are lodging an annual return to the Australian Taxation Office as this is required even if the premises has been occupied for a majority of the year.
If the property is not occupied for at least 6 months of the year, you will be charged the annual vacancy fee which is customarily the same amount you paid for your foreign investment application. An annual return is not required for residential vacant land until a dwelling has been constructed.
What is Additional Foreign Acquirer Duty?
With the introduction of Additional Foreign Acquirer Duty (AFAD) in 2016, foreign investors are required to pay a 7% duty surcharge. AFAD is in addition to the transfer duty already payable on the purchase of residential land in Queensland.
When does AFAD apply?
In determining if AFAD is payable, all of the following conditions must apply:
- You are a foreign individual or Corporation;
- The property will be used solely for residential purposes;
- The liability for your purchase arises on or after 1 October 2016.
If you meet the above criteria but are purchasing property with another person who is an Australian citizens or permanent resident, then you will only be liable for AFAD on the portion of the property you are acquiring.
Foreign Individual and Corporation
You are considered a foreign individual for AFAD purposes if you are not a permanent resident or Australian Citizen. New Zealand citizens may be considered permanent residents for AFAD purposes depending on what category of visa they hold.
A Foreign Corporation is one that is incorporated outside of Australia. A Corporation is also considered foreign if a foreign person, as defined above, has a controlling interest in at least 50% of the company.
Residential Land is land that is used, or is intended to be used, for normal home living and can include vacant land. This is in contrast to other uses such as a business or commercial premises. When determining if land is residential, the following factors may be taken into consideration:
- the zoning of the land;
- whether the building has been approved by a local government for human habitation;
- the degree of use; and,
- whether the use is self-contained. For example, does it contain a bathroom, kitchen, or other home related facilities.
If you have any queries relating to purchasing property as a foreign acquirer, please do not hesitate to contact our office.
This document offers general information only and should not be relied upon as legal advice under any circumstances. Please do not hesitate to contact Rapid Legal Solutions on (07) 4755 9100 to speak with one of our friendly professionals if you require assistance.