Visit the key dates for payroll tax webpage and schedule these dates in your calendar to avoid missing lodgement dates and additional costs associated with late lodgement.
Learn more about becoming a shared equity partner approved by the Chief Commissioner of State Revenue, to support home buyers in purchasing property in NSW.
Identify when corporations are considered foreign persons for surcharge purchaser duty based on substantial interest and aggregate interest holdings.
Last updated:
Determining Surcharge Purchaser Duty Liability for Corporations
A corporation is considered a foreign person if an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest or aggregate substantial interest in the corporation.
If the corporation is considered a foreign person, Surcharge Purchaser Duty is calculated on the dutiable value of the interest the corporation is acquiring.
A person holds a substantial interest in a corporation if the person holds, alone or with one or more associates, an interest of at least 20 % in the corporation.
The entire corporation is deemed to be a foreign person if an individual not ordinarily resident in Australia, a foreign corporation or foreign government holds a substantial interest.
Surcharge Purchaser Duty is calculated on the dutiable value of the interest the corporation is acquiring.
Example
A has a Substantial Interest as they own 20%
B has a Substantial Interest as they are associated persons with A and have a combined ownership over 20%
C has a Substantial Interest as they own 70%
If A, B or C are foreign persons, the corporation is considered a foreign person and liable for Surcharge Purchaser Duty.
Helpful information
A substantial interest may be held through interests in other corporations or trusts. See tracing provisions.
Two or more associated persons hold an aggregate substantial interest in a corporation if the persons, alone or with one or more associates, hold a combined interest of at least 40% in the corporation.
If two or more associated persons hold an aggregate substantial interest in a corporation and are foreign persons, the entire corporation is considered a foreign person.
Surcharge Purchaser Duty is calculated on the dutiable value of the interest the corporation is acquiring.
In accordance with paragraph 26 of Revenue Ruling G009, small holdings of less than 5% are not counted towards an aggregate substantial interest if the corporation has its primary listing on a stock exchange in Australia.
Example
A, B, C & D have an
Aggregate Substantial Interest
as their combined holding is 40%
If A, B, C & D are foreign persons, the corporation is
Liable for Surcharge Purchaser Duty
Helpful information
An aggregate substantial interest may be held through interests in other corporations or trusts. See tracing provisions.
A substantial interest or an aggregate substantial interest may exist as a result of holding interests in other corporations or trusts under the tracing provisions in section 19 of the Foreign Acquisitions and Takeovers Act 1975. The tracing process can be applied multiple times through a number of entities.
Example
A is a foreign person who holds a substantial interest in Company B. This makes company B a foreign person.
Company B has a substantial interest in Trust C. The trustee of Trust C is considered a foreign person.
Trust C has a substantial interest in Company D. This makes company D a foreign person.
Company D purchases residential-related property in NSW
Through the tracing provisions, it is determined that each party is a foreign person. This transaction is liable for Surcharge Purchaser Duty
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.
