The 2016 New South Wales budget has introduced a 4% surcharge on duty payable for foreign persons or entities buying residential real estate in New South Wales. This surcharge is calculated on land tax and other purchaser duty, including stamp duty.

Anyone who has entered into a transaction from 21 June 2016 for the purchase of residential real estate in New South Wales, must complete a Purchaser Declaration.  The Purchaser Declaration will need to be submitted to the Office of State Revenue at the same time that stamp duty is paid and / or calculated.

The purpose of the declaration is to determine:

• whether a transaction is a transfer of residential land to a foreign person or entity;
• to identify foreign persons or entities to calculate surcharge on land tax liability; and
• to collect information on transfer of land in New South Wales to report to the Australian Taxation Office.

The surcharge will apply to not just foreign persons or entities who are landholders of residential property in New South Wales but also to foreign persons or entities who purchase units or shares in the landholder. This will mean, for example, if a foreign person or entity purchases at least a 20% share in a landholder entity or at least a 20% beneficial interest in a trust, the 4% surcharge will apply.

For more information, please contact us.