State Government Surcharge on Foreign Purchasers – no longer a foreign concept
In a bid to control property real estate prices in South Australia, the State Budget reveals a new Government surcharge on foreign purchasers for property acquired in South Australia as of 1 January 2018.
What is the measure?
Foreign purchasers will be required to pay a 4% surcharge of the dutiable value of property acquired (including part of a property or a part interest in the property) in South Australia.
This surcharge is in addition to the stamp duty otherwise payable by purchasers. Where a foreign purchaser is exempt from paying stamp duty, they will also be exempt from the surcharge.
The measure will come into force as of 1 January 2018 and will apply to dutiable instruments entered into on or after this date.
So, who is a Foreign Purchaser?
A foreign purchaser includes natural persons, corporations and trusts.
Foreign Natural person
A foreign natural person is any individual who is not an Australian citizen, Australian permanent resident or New Zealand citizen who holds a special category visa.
A corporation will be foreign where it is incorporated outside Australia or where at least 50% of its shareholding is held by foreign persons, companies of trusts.
A trust will be foreign where the trustee, a person who has the power to appoint under the trust, an identified object under the trust or a person who takes capital of the trust property in default is foreign.
What happens if my residential status changes?
If you cease to be a foreign person (as defined above), not more than 12 months after acquiring the interest in the residential property, you will be eligible for a refund of the surcharge.
On the other hand, if you become a foreign purchaser within three years of acquiring the residential property, the surcharge will be retrospectively imposed.
If you would like to know more about the SA State Government surcharges on foreign purchasers please contact one of our experienced staff at Bambrick Legal today.