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  2. Individuals
  3. Partnerships
  4. Corporations
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  7. Other Exemptions and Concessions
  8. International tax treaties

2. Individuals

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Determining Surcharge Purchaser Duty Liability for Individuals

Australian citizens and individuals ordinarily resident in Australia are not considered foreign persons.

For the purposes of determining Surcharge Purchaser Duty liability, an individual acquiring an interest in residential-related property in NSW is not considered a foreign person if they are an Australian citizen or ordinarily resident in Australia.

Individuals who are not an Australian citizen or ordinarily resident in Australia as at the liability date, will not be liable for Surcharge Purchaser Duty if they meet the requirements of an exempt permanent resident.

Holders of a Partner (provisional) visa (subclass 309 & 820) or Retirement visa (subclass 405 & 410) will not be liable for Surcharge Purchaser Duty, provided they meet the relevant criteria.

The information below will assist in identifying if an individual purchasing residential-related property in NSW is liable for Surcharge Purchaser Duty.

Types of individuals

Australian citizens

An Australian citizen, including a person who holds dual citizenships (one of which is an Australian citizenship), is not a foreign person under any circumstances, whether or not the person is ordinarily resident in Australia.

Reference: section 104J of the Duties Act 1997.

What evidence is required?

New Zealand citizens

For a New Zealand citizen to be considered ordinarily resident in Australia, the individual must meet two criteria.

At the liability date:

  1. The individual is in Australia and the individual’s continued presence in Australia is not subject to any limitation as to time imposed by law (permanent resident of Australia); or

    The person is not in Australia, but, immediately before the person's most recent departure from Australia, the person's continued presence in Australia was not subject to any limitation as to time imposed by law.

    New Zealand citizens who hold a special category visa as per section 32 of the Migration Act (visa Subclass 444) are deemed to meet the first criteria as this visa is considered not to have a limitation as to time imposed by law.
    AND
  2. The individual has actually been in Australia for at least 200 days within the 12 months period prior to the liability for surcharge arising.

    The date of departure and date of arrival should be included when counting the 200 days. The days don’t need to be consecutive.

Helpful information

Exempt permanent resident

If the liable party holds a Special category subclass 444 visa but has not met the 200 day requirements in criteria 2, they may be eligible for Surcharge Purchaser Duty exemption as an exempt permanent resident.

New Zealand Citizens who hold a Dual Citizenship (with a country other than Australia)

New Zealand citizens entering Australia using another passport (other than New Zealand), may be liable for Surcharge Purchaser Duty unless they meet the criteria of ordinarily resident in Australia.

Special category visa

Special category visas under section 32 of the Migration Act 1958 did not commence until 1 September 1994. Prior to that time and from 1973, New Zealand citizens entered Australia under the Trans-Tasman Travel Arrangement.

Evidence should include: A written statement from the individual, evidence to show when they entered Australia and a copy of their current New Zealand passport (if available).

200-day criteria

No discretion can be applied if an individual does not meet the relevant 200-day criteria for Ordinarily Resident in Australia, Exempt Permanent Resident or Retirement visa holder. The individual will be considered a foreign person and liable to Surcharge Purchaser Duty.

What evidence is required?

Please note:
It is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons. Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

For more information refer to Documentary Evidence and Record Keeping.

References

Ordinarily resident in Australia

To be ordinarily resident in Australia, the individual must meet two criteria.

At the liability date:

  1. The individual is in Australia and the individual’s continued presence in Australia is not subject to any limitation as to time imposed by law (permanent resident of Australia); or

    The person is not in Australia, but, immediately before the person's most recent departure from Australia, the person's continued presence in Australia was not subject to any limitation as to time imposed by law.

    Note: A person who holds a Partner (provisional) visa (subclass 309 or 820), will be treated in the same way as permanent resident visa holders.
    AND
  2. The individual has actually been in Australia for at least 200 days within the 12 months period prior to the liability date.

    The date of departure and date of arrival should be included when counting the 200 days. The days don’t need to be consecutive.

Helpful information

Limitation as to time

A limitation as to time isn’t necessarily a date that the individual needs to leave Australia. Some visas may allow individuals to stay indefinitely in Australia until a decision is made on their visa application. This is still considered a limitation as to time.

Refer to the Department of Home Affairs website for specific information on visas subclasses and the associated allowable time in Australia.

Exempt permanent resident

If the liable party is a permanent resident but has not met the 200 day requirements in criteria 2, they may be eligible for a Surcharge Purchaser Duty exemption as an exempt permanent resident.

Retirement visa holders

From 1 July 2019, those who hold a retirement visa subclass 405 & 410 could be exempt from Surcharge Purchaser Duty if they meet the relevant criteria.

200-day criteria

No discretion can be applied if an individual does not meet the relevant 200-day criteria for Ordinarily Resident in Australia, Exempt Permanent Resident or Retirement visa holder. The individual will be considered a foreign person and liable to Surcharge Purchaser Duty.

Reassessments and Refunds

The Duties Act 1997 has provisions that allow for a reassessment and refund where there has been a change in the foreign status or proportions being acquired by the foreign person between the liability date and settlement. See Change of circumstances - Reassessments and Refunds.

What evidence is required?

Please note:
It is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons. Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

For more information refer to Documentary Evidence and Record Keeping.

References

Exempt permanent residents

Exemption for certain permanent residents in respect of principal place of residence.

For transactions entered into on or after the 20 June 2017, individuals not limited by time in Australia (permanent residents) that cannot satisfy the 200-day criteria as at the liability date may be exempt from Surcharge Purchaser Duty.

To be considered an Exempt Permanent Resident, each Purchaser/Transferee who would otherwise be considered a foreign person under Chapter 2A of the Duties Act 1997 must:

  1. Be a permanent resident of Australia at the liability date
    AND
  2. Meet the residence requirement:
    • Use and occupy the property as their principal place of residence,
      and
    • Reside in the property continuously for 200 days within 12 months of the liability date.

The legislation does not allow for this period to be deferred.

Please note:
The permanent resident may travel within Australia or overseas for work or leisure for short periods of time during the 200 continuous days. However, the Chief Commissioner must be satisfied that the property remained the individuals principal place of residence during this period.

Should you require assistance or clarification on specific scenarios, please contact us.

Examples

Not Liable for Surcharge Purchaser Duty

After the liability date (Day 1), an individual who is a permanent resident occupies the property as their principal place of residence and resides in the home for 200 continuous days within the 12 months from the liability date (12 months represented as day 365).

As the individual met the exempt permanent resident requirements, they are exempt from Surcharge Purchaser Duty.

Liable for Surcharge Purchaser Duty

After the liability date (Day 1), an individual who is a permanent resident occupies the property as their principal place of residence on two separate occasions of 100 days (12 months represented as day 365).

As the 200 days were not continuous, the individual did not meet the exempt permanent resident requirements and is liable for Surcharge Purchaser Duty.

Liable for Surcharge Purchaser Duty

After the liability date (Day 1), an individual who is a permanent resident occupies the property as their principal place of residence for 200 continuous days.

However, the 200 continuous days falls outside of the 12-month period from the liability date (Day 1 to Day 365).

As the individual has not resided in the home for 200 continuous days within 12 months from the liability date, the individual did not meet the exempt permanent resident requirements and is liable for Surcharge Purchaser Duty.

Helpful information

Residency Requirement

At the time of lodging the application, the individual must declare on the Purchaser/Transfer Declaration that they will meet the residency requirement.

If the individual does not occupy the property as their principal place of residence for at least 200 continuous days within the first 12 months after the liability date, they will be liable to pay Surcharge Purchaser Duty in addition to any accrued interest. There is no discretion if an individual cannot meet this criteria.

Off the Plan Purchases

Special attention should be paid to off the plan purchases, due to the completion time for off the plan projects. The individual may not be able to fulfill the residence requirements as they must live in the property for 200 continuous days within 12 months from the liability date NOT the settlement date.

Companies and Trusts

Only natural persons can meet the requirements of an Exempt Permanent Resident.

Residential related property acquired by companies or trustees cannot meet either requirement and are not considered an Exempt Permanent Resident.

What evidence is required?

Please note:
It is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons. Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

For more information refer to Documentary Evidence and Record Keeping.

References

Partner (provisional) visa (309 & 820)

An individual who holds a Partner (provisional) visa (subclass 309 or 820) is not considered a foreign person if they meet the following criteria.

At the liability date:

  1. The individual is in Australia and holds a Partner (provisional) visa (subclass 309 or 820), or

    The individual is not in Australia but immediately before the person’s most recent departure from Australia they held a Partner (provisional) visa (subclass 309 or 820).
    AND
  2. The individual has actually been in Australia for at least 200 days within the 12 months period prior to the liability date.

    The date of departure and date of arrival should be included when counting the 200 days. The days don’t need to be consecutive.

Helpful information

While an individual who holds a Partner (provisional) visa (subclass 309 & 820) is limited to time, Revenue Ruling G009 states that holders of this visa type are treated the same as a permanent resident.

Exempt Permanent resident

If the individual has not met the 200 day requirements in criteria 2, they may be eligible for a Surcharge Purchaser Duty exemption as an exempt permanent resident.

200-day criteria

No discretion can be applied if an individual does not meet the relevant 200-day criteria for Ordinarily Resident in Australia, Exempt Permanent Resident or Retirement visa holder. The individual will be considered a foreign person and liable to Surcharge Purchaser Duty.

Reassessments and Refunds

The Duties Act 1997 has provisions that allow for a reassessment and refund where there has been a change in the foreign status or proportions being acquired by the foreign person between the liability date and settlement. See Change of circumstances - Reassessments and refunds.

What evidence is required?

Please note:
It is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons. Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

For more information refer to Documentary Evidence and Record Keeping.

References

Retirement visa (405 & 410)

Exemption of retirement visa holders in respect of principal place of residence

For transactions entered into on or after the 1 July 2019, individuals who hold a Retirement visa (subclass 405 & 410) are exempt from Surcharge Purchaser Duty if they satisfy the following criteria.

  1. Hold a Retirement visa (subclass 405 or 410) as at the liability date,
    AND
  2. Meet the residence requirement:
    • Use and occupy the property as their principal place of residence

      AND
    • Reside in the property continuously for 200 days within 12 months of the liability date.

The legislation does not allow for this period to be deferred.

Note: The permanent resident may travel within Australia or overseas for work or leisure for short periods of time during the 200 continuous days. However, the Chief Commissioner must be satisfied that the property remained the individual’s principal place of residence during this period.

Should you require assistance or clarification on specific scenarios, please contact us.

Examples

Not liable to Surcharge Purchaser Duty

After the liability date (Day 1), an individual who holds a Retirement Visa (subclass 405 or 410) occupies the property as their principal place of residence and resides in the home for 200 continuous days within the 12 months from the liability date (12 months represented as day 365).

As the individual met the Retirement Visa (subclass 405 or 410) residency requirement, they are exempt from Surcharge Purchaser Duty.

Liable for Surcharge Purchaser Duty

After the liability date (Day 1), an individual who holds a Retirement Visa (subclass 405 or 410) occupies the property as their principal place of residence on two separate occasions of 100 days (12 months represented as day 365).

After the liability date (Day 1), an individual who holds a Retirement Visa (subclass 405 or 410) uses the home as their principal place of residence and resides in the home for 200 days within the 12 months from the liability date (12 months represented as day 365).

Liable for Surcharge Purchaser Duty

After the liability date (Day 1), an individual who holds a Retirement Visa (subclass 405 or 410) occupies the property as their principal place of residence for 200 continuous days.

However, the 200 continuous days falls outside of the 12-month period from the liability date (Day 1 to Day 365).

After the liability date (Day 1), an individual who holds a Retirement Visa (subclass 405 or 410) uses the home as their principal place of residence and resides in the home for 200 continuous days.

The 200 continuous days falls outside of the 12 month period from the liability date (Day 1 to Day 365).

Helpful Information

Residency Requirement

At the time of lodging the application, the individual must declare on the Purchaser/Transfer Declaration that they will meet the residency requirement.

If the individual(s) do not occupy that home for at least 200 continuous days in the 12 months following the liability date, they will be liable to pay Surcharge Purchaser Duty in addition to any accrued interest. There is no discretion if an individual cannot meet this criteria.

Off the Plan Purchases

Special attention should be paid to off the plan purchases, due to the completion time for off the plan projects. The individual may not be able to fulfill the residence requirements as they must live in the property for 200 continuous days within 12 months from the liability date NOT the settlement date.

What evidence is required?

Please note:
It is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons. Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

References

Assisted Passage Migration Scheme

The Assisted Passage Migration Scheme was one of several British migration schemes that ran from 1945 to 1959. The scheme was often referred to as the “Ten Pound Pom scheme”

It should be noted that they are not Australian citizens although they arrived in Australia under this scheme. However, their time in Australia is not considered to be limited by time.

To be exempt from Surcharge Purchaser Duty they must meet two criteria.

  1. Arrived in Australia under the Assisted Passage Migration Scheme
    AND
  2. The individual has actually been in Australia for at least 200 days within the 12 months period prior to the liability for surcharge arising.

    The date of departure and date of arrival should be included when counting the 200 days. The days don’t need to be consecutive

What evidence is required?

  • Completed Purchaser/Transferee Declaration (ODA 076i) form
  • A copy of the Document of Identity that was used for their travel to Australia under the scheme. This was a single journey travel facility which named all persons it applied to, their details, and a photo.
  • A copy of their current Proof of Identity
  • International movement record that shows the individual has been in Australia for the 200 days prior to the liability date.

Note: Individuals who arrived in Australia before 1990 and have not travelled out of Australia, may have to apply to the Department of Home Affairs to have a record created.

If the above evidence cannot be obtained, contact us.

Please note:
It is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons. Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

For more information refer to Documentary Evidence and Record Keeping.

Change of circumstances - Reassessments and refunds

The Duties Act 1997 has provisions that allow for a reassessment and refund where there has been a change in the foreign status or proportions being acquired by the foreign person between the liability date and settlement.

Change in proportion of share transferred to foreign persons

Foreign persons increasing their share

If the share in the residential-related property agreed to be sold or transferred to foreign persons is less than what is actually transferred to foreign persons, Surcharge Purchaser Duty is to be charged on the additional proportion of the share or shares transferred to foreign persons.

All documents must be lodged for assessment by Revenue NSW via eDuties before settlement.

For more information, refer to section 104Y of the Duties Act 1997.

Foreign persons reducing their share

Surcharge Purchaser Duty is calculated on the agreement and duty must be paid within 3 months.

If the share in the residential-related property agreed to be sold or transferred to foreign persons is more than what is actually transferred to foreign persons, the Chief Commissioner will reassess the agreement and charge Surcharge Purchaser Duty on the share actually transferred to the foreign persons. Any excess Surcharge Purchaser Duty will be refunded.

Only after settlement has occurred can the refund be considered. All documents must be lodged for assessment by Revenue NSW via eDuties.

For more information, refer to section 104Y of the Duties Act 1997.

Refund if property transferred to persons who are no longer foreign on transfer

When a purchaser/transferee is a foreign person at the liability date, Transfer duty and Surcharge Purchaser Duty must be paid within 3 months from the liability date.

An individual may apply for a refund of Surcharge Purchaser Duty if they are no longer a foreign person at settlement or the share transfer to a foreign person is reduced.

At the date of settlement:

  1. The individuals continued presence in Australia must not be limited as to time imposed by law (permanent resident)

    AND
  2. The individual has actually been in Australia for at least 200 days in the 12 months prior to the date of settlement.

The refund request can only be made once settlement has occurred and must be made within 5 years of the initial assessment.

For more information, refer to section 104ZF of the Duties Act 1997.

What evidence is required for refund?

  • Cover letter requesting the refund with confirmation of the date the individual became Ordinarily resident of Australia.
  • Evidence confirming date of settlement
  • Copy of the complete contract for sale or dutiable instrument (if there is no agreement)
  • Copy of the Duties Notice of Assessment
  • Title search showing transferee/s on title
  • Purchaser/Transferee declaration form (ODA076i) (PDF, 693.82 KB) that was provided with original assessment  

    AND

    Evidence to confirm the individual is no longer a foreign person:
  • Copy of current Foreign Passport
  • Copy of Current visa / VEVO report (refer to the Department of Home Affairs)
  • International movement record that shows the individual has been in Australia for the 200 days prior to the date of settlement.
    (refer to the Department of Home Affairs)
  • Australian passport or Australian citizenship certificate (if applicable)

Please note:
It is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons. Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

For more information refer to Documentary Evidence and Record Keeping.

Documentary evidence and record keeping

The Duties Client Identification (CI) and Proof of Status factsheet and evidentiary requirements list the evidence required for all Duties transactions.

When residential-related property is being acquired, evidence confirming proof of status may be required for each liable party (individual, corporation, partnership, or trust).

The method of lodgement determines the initial information required before processing or lodging.

Transactions processed on EDR

To ensure an accurate assessment of Surcharge Purchaser Duty it is recommended practitioners processing transactions on EDR, sight or obtain proof of status documentation to confirm the purchaser/transferees are not considered foreign persons.

Transactions lodged with Revenue NSW

Transactions lodged with Revenue NSW via eDuties must provide all evidence at the time of lodgement.

Transactions selected for Audit

Transactions that have been processed on EDR and selected for audit must provide Duties Client Identification (CI) and Proof of Status documentation along with the evidentiary requirements for that transaction.

References