Earlier this year, I mentioned that for New Zealanders buying Queensland property, it would be a good idea to obtain legal advice (before signing any contract).  At the Property Law Conference held in Brisbane last week, the Office of State Revenue clarified their approach to the treatment of New Zealand citizens regarding the amount of transfer duty that might be payable.

Additional Foreign Acquirer Duty

When buying real estate in Queensland, foreign buyers now pay an extra 3% Additional Foreign Acquirer Duty (AFAD) to the Queensland government.

Example: Where a foreign person buys a $600,000 property, the duty paid is:

Transfer duty            $20,025           ($12,850 when the property will be their home)

AFAD                          $18,000

Total                          $38,025

New Zealand citizens living in Australia

New Zealand citizens (not to be confused with New Zealand Permanent Residents) who now reside in Australia will not have to pay the $18,000 AFAD if they sign the contract in Australia.  If a New Zealand citizen who resides in Australia signs the Contract whilst outside of Australia, it is likely that they will have to pay the $18,000 AFAD.

A New Zealand resident (with a Passport from another country) will pay the $18,000 AFAD regardless of where they live, and regardless of where they sign the contract.

New Zealand citizens living outside Australia

AFAD will be charged to a New Zealand citizen who resides outside Australia, but who signs the contract in Australia, if there sole purpose for visiting Australia is to buy property in Australia and avoid paying the AFAD.

The Office of State Revenue (OSR) may investigate the circumstances surrounding the signing of the Contract and if there is evidence that the New Zealand citizen was attempting to avoid AFAD, the OSR will charge the duty.  This might occur months or years after the purchase was completed.

Whilst my conference notes state that the AFAD will be charged where the sole purpose for the visit to Australia was to buy property, it would not surprise if a lesser test was adopted so that AFAD might still be charged where a property purchase was, for example, a significant purpose (or some similar expression) for the visit.

Ready to buy?

Obtain advice and clarify the law before you sign any Contract and commit to a purchase !

Disclaimer: The above is to be considered as general education. This is not advice and it is not to be acted upon without advice from a qualified professional who understands your personal circumstances.

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