On 21 February 2023 Revenue NSW announced that foreign purchaser surcharge duty (an additional 8% duty) and foreign owner land tax (an additional 2% land tax) is not payable by individuals who are citizens of New Zealand, Finland, Germany or South Africa, and may not be payable where the entity acquiring the residential property concerned (e.g. company, trust or partners in a partnership) is a “foreign person” by reason of ownership interests by persons who are citizens of those countries.
The exemption arises as it has been determined that the surcharge duty provisions are inconsistent with the non-discrimination provisions of international tax treaties entered into by Australia with each of those countries, as the non-discrimination provisions extend to “taxes of every kind or description” imposed by Australia and its political subdivisions, and this necessarily includes State taxes.
It is expected that that the same issues will arise for all other Australian jurisdictions that impose surcharge purchaser duty and surcharge land tax, although the other States are yet to make an announcement.
What happens now?
Refunds will be available for purchasers/transferees (for surcharge transfer duty), and landowners (for surcharge land tax), from the nations concerned who paid surcharge purchaser duty or surcharge land tax on or after 1 July 2021.
Revenue NSW has stated that they will actively identify those that are eligible for a refund.
However, we recommend that any individuals who have previously paid either surcharge purchaser duty or surcharge land tax consider their potential entitlement to a refund and actively engage with Revenue NSW.
Similarly, it is unlikely that Revenue NSW will have sufficient information to assess the potential eligibility of non-individuals for refunds, so if you are a company, trust or partnership and are considered a “foreign person” by reason of ownership interests by persons who are citizens of New Zealand, Finland, Germany or South Africa, you should actively engage with Revenue NSW.
If you would like to learn more about your eligibility of the Refunds, please contact Calibre Business Advisory on (02) 9261 2177. Our dedicated team will be happy to assist.