State Government Surcharge on Foreign Purchasers: No Longer a Foreign Concept

Foreign persons, corporations, or trusts that acquire an interest in residential land in South Australia are required to pay a foreign ownership surcharge.

What Is the Measure?

As of 1 January 2018, foreign purchasers are required to pay a 7% 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 came into force as of 1 January 2018 and applies to dutiable instruments entered into on or after that date.

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; nor
an Australian permanent resident; nor
a New Zealand citizen who holds a special category visa.

Foreign Corporation

A corporation will be foreign where it is incorporated outside Australia or where a person who is a foreign person or a trustee of a foreign trust (or several such persons in combination):

Holds 50% or more of the corporation shares; or
Is or entitled to cast (or control the casting of) 50% of the votes of a general meeting of the corporation.

Foreign Trust

Whether a trust is discretionary, or whether the beneficial interest is fixed, will govern the manner to determine whether the particular trust is foreign.

A discretionary trust will be foreign where one of the following is a foreign person:

trustee;
appointor;
an identified object within the trust; and
a person who takes capital of the trust in default.

A fixed beneficial interest trust will be foreign where a beneficial interest of 50% or more of the capital is held by one or more foreign persons.

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.

Contact Us

If you would like to know more about the SA State Government surcharge on foreign purchasers, contact us at Bambrick Legal today. We offer a free, no-obligation 15-min consultation for all enquiries.