Foreign stamp duty surcharge
The Queensland Commissioner of State Revenue (the Commissioner) has recently released three Guidelines to assist taxpayers in determining when the new Additional Foreign Acquirer Duty (AFAD) rules under the Queensland Duties Act will apply. Under the rules, from 1 October 2016, an additional 3 percent stamp duty surcharge will apply to certain dutiable transactions that involve both “foreign persons” and “AFAD residential land”.
The three guidelines broadly confirm the Commissioner’s view that:
- “AFAD residential land” is land in Queensland that is, or will be, used solely or primarily for residential purposes, subject to certain conditions. AFAD residential land would, therefore, typically include homes and apartments, vacant land on which a home or apartment will be built and land for residential development.
- Other types of residential property, such as retirement villages, manufactured home parks and student accommodation, may be AFAD residential land and will be considered by the Commissioner on a case-by-case basis.
- A “foreign person” is defined as a foreign individual, a foreign corporation and a trustee of a foreign trust. While this obviously captures entities which are directly controlled by foreign persons, due to the wide operation of the “related persons” provisions, the AFAD surcharge may be triggered where a non-foreign majority shareholder in a purchasing corporation is related to a foreign minority shareholder (e.g., a husband and wife shareholders in a company acquiring AFAD residential land, where one of the individuals is a foreign individual).
The Guidelines also outline the circumstances where the Commissioner will grant ex gratia relief from the AFAD rules for a “significant developer” or a developer undertaking a “significant development”.
Under the AFAD rules, the Commissioner can apply to the Supreme Court for an order to sell a purchaser’s land to recover unpaid AFAD. Accordingly, it is important to consider the potential application of the AFAD rules when purchasing residential land, or land capable of being residential land, in Queensland. We have already amassed considerable experience in making successful applications for relief from the similar Victorian provisions, which can be applied in relation to the application of the new Queensland rules to taxpayers.