Additional Foreign Acquirer Duty – written by Rachel Clutterbuck, Lawyer.
If you are acquiring residential land in Queensland and you are classed as a foreign acquirer, you may be liable for Additional Foreign Acquirer Duty (“AFAD”). AFAD is a duty that is imposed in addition to other duties such as transfer duty.
For the purposes of AFAD, foreign acquirers include the following:
• Foreign corporations;
• Foreign trust; and
• Foreign individuals.
For the purposes of AFAD, a corporation may be classed as a foreign corporation if they are incorporated outside of Australia. They may also be classed as a foreign corporation if a controlling interest of at least 50% is held by foreign persons or persons related to foreign persons.
Similarly, if 50% or more of a trust’s interests are trust interests of foreign corporations, foreign individuals, trustees of a foreign trust, or related persons, a trust will be classed as a foreign trust for the purposes of AFAD.
Individuals will be classed as foreign individuals if they are not an Australian citizen, permanent resident or a New Zealand citizen with a special category visa.
AFAD will apply to a transaction if you are a foreign acquirer when you enter into a transaction involving AFAD residential land. AFAD residential land includes land in Queensland that is used primarily for residential purposes, or that will be used primarily for residential purposes.
AFAD will continue to apply even if the foreign status of the acquirer changes at a later date. For example, foreign individuals who enter into a Contract for the purchase of AFAD residential land in Queensland will still be required to pay AFAD even if they become an Australian citizen or permanent resident prior to settlement.
If there are multiple entities acquiring an interest, AFAD will be calculated based on the foreign acquirer’s interest.
Located in Maroochydore on the Sunshine Coast, Miller Sockhill Lawyers regularly advise clients on property law matters.