Hard to get Foreign Buyers to buy? It just got 3% harder.
Starting 1 October 2016, foreign buyers will have to pay an additional 3% transfer duty (stamp duty) when buying residential land in Queensland. This surcharge is called Additional Foreign Acquirer Duty (AFAD). In order to keep this update brief we will not detail the definitions here. Suffice to say the legislation throws a fairly wide and heavy blanket over definitions of foreign buyers, foreign individuals, foreign corporations, AFAD Residential Land and Foreign Trusts to make sure that all categories of buyer will fall within the new laws.
Long Arm of the Law
It goes further to ensure that if an Australian entity (with Australian shareholders or trust interests ) is used to buy the land and that entity later becomes a foreign entity within 3 years (for example as a result of transfers of shares or trust interests), then the transaction will need to be re-assessed and more duty presumably paid. For example an internal share transfer from Australian Citizen / entity to foreign entity / individual after settlement won’t avoid the additional duty payable.
Similarly, land which ultimately will be used as AFAD Residential Land will be subject to a five-year reassessment period.
Contracts signed before 1 October 2016 will not be subject to AFAD, even where settlement occurs after that date. However, the same cannot be said about options. That is, if an option is entered into before 1 October, but exercised on or after 1 October, AFAD will apply.