Property News Alert: New changes affect foreign buyers and investors interested in residential and agricultural land
With the new financial year come a number of recent changes of relevance to foreign buyers and investors interested in residential land in Victoria and agricultural land across Australia.
It is important to be aware of the following:
Stamp duty increase for foreign buyers
With effect from 1 July 2015, foreign buyers of property in Victoria are required to pay 3% more in stamp duty. The surcharge now applies to all contracts of sale signed after 1 July 2015, for vacant residential land and land with a building on it.
A foreign buyer (or purchaser) may be a foreign natural person, a foreign corporation or a trustee of a foreign trust.
By way of example, stamp duty on a property valued at $600,000.00 will normally be $31,070.00. The additional 3% will mean the foreign purchaser pays a further $18,000.00, i.e. total stamp duty payable would be $49,070.00.
A method of enforcement is that all purchasers must now complete and sign a Purchaser Statement for any transaction after 1 July 2015, stating the citizenship or visa status of all transferees, including company and trust details where applicable.
Agricultural Land Register
Additionally, the Australian Taxation Office (ATO) has introduced a requirement for all foreign investors who hold interests in agricultural land to register those interests from 1 July 2015 regardless of the value of the land.
The ATO will collect information including the location and size of property as well as the size of interest acquired on new foreign investment in agricultural land in order to develop a national register. The data collected will be made available to the public from 2016.
The Treasurer, Joe Hockey, has stated this move will strengthen reporting requirements and provide a clear picture of foreign ownership of agricultural land in Australia.
All existing holdings must be registered with the ATO by 31 December 2015. Any new interests are required to be registered within 30 days. Registration may be made online on the ATO’s website by the landholder or their agent (including their solicitor).
Since 1 March 2015, the screening threshold for foreign purchases of agricultural land by private sector investors has been lowered from $252 million to $15 million. For foreign government-related entities and state-owned enterprises the Foreign Investment Review Board (FIRB) scrutiny threshold for all proposed investments, including agricultural land, continues to remain at zero.
Stricter penalties for foreign investors who breach the rules as well as application fees will apply from 1 December 2015.
Dan Flynn, Partner
Martyn Tier, Partner