Additional Foreign Acquirer Duty (AFAD) is an extra amount of duty payable to the Office of State Revenue (OSR) that applies to transactions that are liable for transfer duty, landholder duty or corporate trustee duty. AFAD applies when a company or individual is a foreign person and an acquirer for the purposes of the transaction and the transaction involves “AFAD residential land”.
From 1 July 2018, AFAD in Queensland is proposed to increase from 3% to 7%.
A foreign person is:
AFAD is designed to apply no matter how the interest in land is held. For example if a foreign person is a partner in a partnership and another partner acquires the land for the partnership, the transaction is caught.
“AFAD residential land” is land in Queensland that is or will be used solely or primarily for residential purposes. AFAD residential land includes:
Sellers of residences should take steps to confirm the status of buyers of their property by undertaking a Visa Entitlement Verification Online (VEVO), for a fee, from the Department of Immigration and Border Control.
However, if a buyer subsequently changes its ‘foreign’ status within three years of the relevant transaction, they are obliged to re-lodge the transfer with the OSR for reassessment of stamp duty. As sellers are jointly liable with buyers for the payment of stamp duty, if a buyer has left Australia and is uncontactable, the OSR will look to the seller to recover any AFAD that becomes payable.
From 2007 to 2016 there was $16.5 billion in direct foreign investment in commercial real estate into Queensland. Foreign investment increases the amount of capital available for investment in construction, creating jobs and economic growth. A higher tax rate for these investors may present an economic obstacle to Queensland’s growth, especially with AFAD in, for example, NSW remaining at 3%.
If you would like further information about AFAD and what the changes will mean for you, please contact a member of our team.
"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."