The New South Wales Government has announced it is removing the surcharge it imposes on property investors from New Zealand, Finland, Germany, and South Africa, after finding that the tax regime clashes with international treaties. Mieke Elzer, Property and Commercial Lawyer at Attwood Marshall Lawyers looks at how affected owners may be eligible for a refund.
Summary
Revenue New South Wales announced on February 21 that effective immediately, citizens of New Zealand, Finland, Germany and South Africa who are buying residential property or land in NSW will no longer be subject to the foreign surcharge on purchaser stamp duty and land tax.
The move marks a big shift in policy, and it follows a determination that the NSW surcharge provisions are inconsistent with international tax treaties signed between the Australian Federal government and those countries.
Purchasers or Transferees from New Zealand, Finland, Germany, and South Africa who have paid the duties on or after 1 July 2021, may be eligible for a refund. If you think you are eligible, Attwood Marshall Lawyers is here to guide you through the refund process and make sure you get what you are entitled to.
[Update: Since publishing this blog, the New South Wales government has also added India, Japan, Norway and Switzerland to the list of exempt countries. Citizens of these countries are also no longer required to pay surcharge purchaser duty or surcharge land tax. The government announced the updated policy on 29 May 2023.]
What are the surcharge provisions and what has changed?
The surcharge provisions are a tax on foreigners who are buying residential-related property in New South Wales. They apply to agreements for sale of land, property transfers and declarations of trust. The surcharge is currently calculated at 8 per cent of the purchase price or value of the property, whichever is higher, and is paid on top of the ordinary transfer duty.
Last week’s announcement affects citizens of New Zealand, Finland, Germany, and South Africa who did not at the time of purchasing meet the requirements for being “ordinarily resident in Australia” or an “exempt permanent resident.”
Moving forward, citizens of those countries will no longer be subject to the requirements, as no foreign surcharge will apply to them at all.
Corporations, trusts, or partnerships affiliated with those countries may also be off the hook, provided there are not substantial interests held by an entity that does not meet the criteria for exemption. Where a foreign person not from one those nations holds a substantial interest in the non-individual purchasing entity, that entity will still be liable for the foreign surcharge.
What is the process for getting a refund?
Revenue NSW has said it will “proactively” identify customers that paid the tax on or after 1 July 2021 and contact them if it uncovers transactions that are eligible for reimbursement. Any interest or penalty tax that has been paid will also be refunded.
The whole process should be completed 28 days after Revenue NSW receives all the evidence it needs, and money will only be transferred to Australian bank accounts unless there are exceptional circumstances that mean it must go to an overseas bank account.
If the authority decides that a taxpayer is not eligible for a refund, even though they paid surcharge purchaser duty and are a citizen of New Zealand, Finland, Germany or South Africa, there may be other rights of review available to that individual. If you find yourself in that situation, it’s best to seek legal advice to determine the next steps.
Attwood Marshall Lawyers – helping clients understand their rights and obligations when buying and selling property
New South Wales is the first state to announce that it is scrapping its foreign tax surcharges in light of the Federal government’s international treaties. The other states have yet to follow suit.
Rather than wait for Revenue NSW to contact them, individuals can reach out to the property team at Attwood Marshall Lawyers to understand if they have been impacted by these changes. We can help investigate their eligibility and liaise with Revenue NSW on their behalf.
We understand that buying and selling property can be stressful, and it is our goal to reduce pressure throughout the entire transaction.
With a dedicated team who practice exclusively in property and commercial matters, we can provide clients with expert independent legal advice about their specific circumstances as a buyer, seller, or agent. Attwood Marshall Lawyers can review Contracts of Sale, negotiate special conditions, ensure the transaction is not in breach of any laws or regulations, and settle disputes or take legal actions if someone’s rights have been compromised.
For help and advice relating to a property matter, contact our Property and Commercial Department Manager, Jess Kimpton, on direct line 07 5506 8214, email jkimpton@attwoodmarshall.com.au or mobile 0432 857 300.
