Be Prepared for The New Transfer Duty Laws
New changes in the near future will see foreign investors hit with greater transfer duty when they buy property in Queensland.
The changes will apply from contracts that are entered into from 1 October 2016 and will mean that a foreign investor will be hit with an additional 3% transfer duty on new acquisitions. These charges apply to all foreign investors even if an investor is exempt from approval from the Foreign Investment Review Board (i.e. New Zealand citizens in some cases) they will still be required to pay this additional transfer duty.
What is a foreign investor
The act defines a foreign investor to be:
1. A person who is not an Australian citizen or permanent resident.
2. A corporation where 50% or more of the voting power or shares are controlled by a foreign person, foreign
3. A trust where 50% or more of the entities (both individuals and companies) are foreign persons, foreign corporations or foreign trusts. In the case of a normal family discretionary trust that would mean that 50% of the main beneficiaries were owned by foreign persons.
The additional transfer duty will also apply where there is a transfer of an interest in an entity that owns land. For example, if a company owns the land and the shares in that company are transferred, the additional transfer duty will still be payable.
Where the additional duty is not paid by the foreign investor the Commissioner will take a charge over the property in priority to all other interests in the property to require payment of the additional transfer duty.
When these changes come into effect it is important that foreign investors are aware of the changes and the additional costs before they sign a contract. Financers funding the purchase of properties by investors will also want to be sure that the additional duty is paid so that the Commissioner does not take a charge over the property.
At Streten Masons Lawyers we have extensive experience in acting for foreign investors. If you require any advice in relation to the requirements for foreign investors (which are constantly changing) please contact Jeremy Streten on 07 3667 8966 or Jeremy@smslaw.com.au.
By Jeremy Streten
