With newfound laws comes newfound confusion, and the surcharges that were recently introduced to duties and land tax are no exception.

The New South Wales (NSW) Treasurer, The Hon. Gladys Berejiklian MP, announced changes to the State Revenue Legislation Amendment (Budget measures) Act 2016, which affects state taxes regarding residential real estate and land purchased or owned by foreign persons.

We have set out the current situation for you.
 

Am I a Foreign Person?

Generally, yes, if you are:

  • an individual not ordinarily resident in Australia;
  • a corporation in which such an individual has a substantial interest;
  • a trustee of a trust in which such an individual holds a substantial interest;
  • a foreign government.

 

No, if you are:

  • an Australian citizen, wherever you reside;
  • a New Zealand citizen holding special category visas and you have been in Australia for at least 200 days in the last 12 months.

 

What is Land Tax?

Land tax is a tax levied on the owners of land in NSW as at 12 am midnight on 31 December each year. Land tax applies regardless of whether income is earned from the land. You may need to pay and register for land tax if:

  • You own (including jointly own) any property in NSW;
  • The property is not your principal place of residence (your home) or other exempt land;
  • As at midnight on 31 December; and
  • The total value of all your taxable land is greater than the land tax threshold ($482,000).

 

Tax year Threshold Rate
2016 $482,000 $100 plus 1.6% up to the premium threshold.
$2,947,000 and over (Premium threshold) $39,540 for the first $2,947,000 then 2% over that.

Table taken from www.osr. nsw.gov.au

 

What changed?
A 0.75% surcharge came into effect on land tax of the taxable value of residential land owned by a foreign person at midnight on 31 December 2016. In short:

  • The tax is separately assessed in relation to each parcel of land and is payable in addition to any land tax otherwise payable by a foreign person.
  • There is no tax threshold to exempt land below the specified value
  • There are no exemptions for land occupied by a foreign person as a principal place of residence.

 

The content of this article is intended to provide a summarised general guide to this topic. Contact us to seek legal advice regarding your specific circumstances. Contact OSR for the full details of the changes.