International tax surcharge purchaser duty or surcharge land tax exception in NSW
Revenue NSW communicated On the 21 February 2023, that NSW surcharge provisions are inconsistent with a number of international tax treaties entered into by the Federal Government.
India, Japan, Norway and Switzerland have since been identified as additional nations that have international tax treaties with the Federal Government which may affect surcharge purchaser duty and surcharge land tax liability.
Citizens of certain nations will no longer be subject to surcharge purchaser duty or surcharge land tax when purchasing residential property or land in their personal capacity. This exemption applies to individuals who are acquiring property or land for residential purposes and hold citizenship in the following countries:
- New Zealand
- South Africa
What is surcharge land tax exception in NSW?
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.
The refund period has now been extended . 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 January 2021 (previously 1 July 2021).
To avoid foreign stamp duty, individuals looking to purchase residential property can take the following steps as of 1 March 2020:
Utilize a different purchase vehicle: By choosing a purchase vehicle that does not fall under the foreign purchaser category, individuals can avoid the foreign purchaser surcharge duty and surcharge land tax exception in NSW.
Amend the trust deed: If purchasing property through a trust, amending the trust deed to include suitable restrictions on foreign persons can help exempt them from foreign stamp duty. These restrictions will ensure that the trust is not classified as a foreign purchaser.
By implementing either of these approaches, individuals can ensure they are not liable for foreign purchaser surcharge duty and land tax when buying residential property.
Foreign individuals who purchase residential-related property in NSW are subject to surcharge purchaser duty. Currently, the surcharge purchaser duty is calculated at 8% of the dutiable value, which is determined based on the higher value between the purchase price and the property’s assessed value. This duty is in addition to the regular transfer duty that is applicable.
For frequently asked questions and key information: