KEY TAKE-OUTS:
- Foreign persons from India, Japan, Norway and Switzerland have now been added to the list of nations which may no longer be required to pay surcharge purchaser duty
- Foreign persons from India, Japan, Norway and Switzerland have now been added to the list of nations which may no longer be required to pay surcharge land tax
- Foreign persons from India, Japan, Norway and Switzerland who have paid surcharge purchaser duty since 1 January 2021 may be eligible for a refund
- Foreign persons from India Japan, Norway and Switzerland who have paid surcharge land tax since 1 January 2021 may be eligible for a refund
Update 6 June 2023
Revenue NSW has now announced that in addition to the countries already acknowledged to have international tax treaties with the Federal Government, they have now added additional nations to the list being India, Japan, Norway and Switzerland.
If you are a foreign persons from one of the above countries and have paid surcharge purchaser duty on a property or surcharge land tax since 1 January 2021, you may be entitled to a refund of the funds paid.
Surcharge Purchaser Duty
Generally speaking, foreign persons who acquire residential property in NSW are liable to pay surcharge purchaser duty. Surcharge purchaser duty is payable in addition to transfer duty (formerly called stamp duty) and is currently calculated at a rate of 8% of the dutiable value.
For example, Kim is a Foreign Person. Kim purchases a property for $850,000. The transfer duty payable is $33,360.00. In addition to this, Kim must pay surcharge purchaser duty of $68,000.00 (being 8% of the purchase price). The total duty due to Revenue NSW by Kim is $101,360.00.
Surcharge Land Tax
Generally speaking, foreign persons who own residential land in NSW are liable to pay surcharge land tax. Surcharge land tax is payable in addition to any land tax that you may already pay. Surcharge land tax may also be payable even if you don’t pay land tax. No tax-free threshold applies to surcharge land tax. From the 2023 land tax year, the surcharge rate is 4%.
What’s changed?
Revenue NSW have just published the following media release:
“It has been determined that NSW surcharge provisions are inconsistent with international tax treaties entered into by the Federal Government with New Zealand, Finland, Germany and South Africa. These international tax treaties are related to taxation and other matters and have been given the force of federal law.
Effective immediately, individuals that are citizens of the nations concerned purchasing residential-related property or land in their own capacity will no longer be required to pay surcharge purchaser duty or surcharge land tax.
Surcharge purchaser duty or surcharge land tax liability for non-individuals, such as corporations, trusts or partnerships that arises because of an entity’s affiliation with these nations, may also be affected by the international tax treaties.
Refunds may be available for purchasers/transferees, and landowners, from the nations concerned who paid surcharge purchaser duty or surcharge land tax on or after 1 July 2021.”
What does this mean for you?
Due to international tax treaties entered into by the Federal Government, effective immediately, if you’re a foreign person who is a citizen of New Zealand, Finland, Germany or South Africa who paid surcharge purchaser duty and/or pay surcharge land tax, you may be eligible for a refund of the amount/s paid.
Due to international tax treaties entered into by the Federal Government, effective immediately, if you’re a foreign person who is a citizen of New Zealand, Finland, Germany or South Africa who is looking to purchase a residential property in NSW but have been deterred or prevented from doing so due to the additional costs associated with surcharge purchaser duty and/or pay surcharge land tax, you may no longer incur them. That dream of owning your own home may now be within reach!
It’s important to note that non-individuals, such as corporations, trusts, or partnerships, that arise from affiliation with these nations may also be affected by international tax treaties. It is best to consult a tax professional to determine the exact implications of your situation.
How much money can you expect to save?
The amount of money that you can save as a foreign person due to the recent exemption from surcharge purchaser duty and surcharge land tax depends on the value of the property you are purchasing and the applicable tax rates.
Generally speaking, foreign persons who acquire residential property in NSW are liable to pay surcharge purchaser duty at a rate of 8% of the dutiable value. For example, if you purchase a property for $1,000,000, you would have had to pay surcharge purchaser duty of $80,000 in addition to the transfer duty.
Similarly, foreign persons who own residential land in NSW are liable to pay surcharge land tax at a rate of 4% from the 2023 land tax year. This surcharge is payable in addition to any land tax that you may already pay. For example, if your land tax bill is $10,000, you would have had to pay an additional surcharge of $400.
However, with the recent exemption, if you are a citizen of New Zealand, Finland, Germany or South Africa who is looking to purchase a residential property in NSW, you may no longer incur the additional costs associated with surcharge purchaser duty and/or surcharge land tax. This means that you may save thousands of dollars on these taxes.
In summary, the exemption of citizens of New Zealand, Finland, Germany, and South Africa from surcharge purchaser duty and surcharge land tax is a positive development that may help more foreign persons purchase residential properties in NSW. It’s always best to seek professional advice to fully understand your tax obligations and entitlements.
ABOUT MELINA COSTANTINO
Melina joined the Coutts team in 2010 working as a Licenced Conveyancer within our Property & Conveyancing team, based out of our Campbelltown office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
Melina Costantino
Senior Licensed Conveyancer & JP
info@couttslegal.com.au
1300 268 887
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
