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Surcharge land tax exemption – residential land used for commercial purposes

Foreign persons who own residential land used for commercial purposes in NSW may be eligible for an exemption from surcharge land tax. Learn how to apply.

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What is residential land used for commercial purposes?

These are accommodation facilities on residential land that are:

  • operated to generate a regular profit, and
  • not used or occupied as a separate dwelling for residential purposes.

Some examples of residential land used for commercial purposes include hotels, boarding houses, caravan parks, and aged care facilities.

Who is eligible for the exemption

In New South Wales (NSW) surcharge land tax applies to residential land owned by foreign persons.

For definitions of foreign person and residential land, read What is surcharge land tax?

Foreign persons who own residential land in NSW used for the following commercial purposes may be eligible for an exemption from surcharge land tax:

  • Hotels, motels, and inns.
  • Hostels and boarding houses.
  • Student accommodation.
  • Aged care and other care facilities.
  • Bed and breakfast accommodation.
  • Caravan and home parks.
  • Separately titled rooms, apartments, serviced apartments, cottages and villas.

Need more detailed information?

Revenue Ruling G011 Surcharge land tax and duty: Residential premises that are not dwellings further defines these premises and outlines the factors relevant to determining a commercial purpose.

Note

Residential land used for commercial purposes that is exempt from surcharge land tax may still be liable for land tax.

Applying for the exemption

Exemptions are not automatically applied.

If you are a foreign owner of residential land used for commercial purposes, you must apply for this exemption or a refund with Revenue NSW.

When to apply

Exemptions

If you think you qualify for the exemption you should apply by:

  • 31 March if you are a new surcharge land tax customer, or
  • the due date of your assessment notice.

Include all supporting documents to prove your land qualifies for the exemption.

Refunds

If you have previously paid surcharge land tax and believe you may qualify for an exemption, you must apply within 5 years of the original assessment.

If your exemption is granted, you will receive a new assessment, and any credit will be refunded. Learn how to request a refund.

Supporting documents or information you need to supply

To support your application, you will need to provide:

  • an original copy of the contract of sale for the land
  • documents that show the type of business you run, and
  • proof that any dwellings on the property are not used for residential purposes.

Open the headings below to see what documents you need to provide for different types of residential land used for commercial purposes.

Hotels, motels and inns
  • A no objection notification or exemption certificate from Foreign Investment in Australia.
  • Planning authority permissions.
  • Management agreements.
  • Hotel/motel insurance policies.
  • Statutory licences, as applicable.
  • Banking and finance documents
Hostels and boarding houses
  • A no objection notification or exemption certificate from Foreign Investment in Australia.
  • Planning authority permissions.
  • Proof of registration in the register of boarding houses.
  • Boarding house licence if the boarding house is an assisted boarding house.
  • Occupancy agreements.
Student accommodation
  • A no objection notification or exemption certificate from Foreign Investment in Australia.
  • Planning authority permissions.
  • Contractual documentation.
  • Occupancy agreements setting out the conditions between the parties.
Aged care and other care facilities
  • A no objection notification or exemption certificate from Foreign Investment in Australia.
  • Planning authority permissions.
  • Documents showing that an approved provider of aged care is operating on the premises.
  • Lease or occupancy agreements setting out the rights and responsibilities of the parties.
Bed and breakfast accommodation
  • A no objection notification or exemption certificate from Foreign Investment in Australia.
  • Planning authority permissions.
  • Management agreements.
  • Hotel/motel insurance policies.
  • Statutory licences, as applicable.
Caravan and home parks
  • A no objection notification or exemption certificate from Foreign Investment in Australia.
  • Planning authority permissions.
  • Documents showing that the park is operated:
    • on a commercial basis, and
    • for short-term accommodation (i.e. less than 90 days).
Separately titled rooms, apartments, serviced apartments, cottages and villas
  • A no objection notification or exemption certificate from Foreign Investment in Australia.
  • Planning authority permissions.
  • Management agreements.
  • Body corporate by-laws which provide for the management, administration, control and use of the premises and common property.

Accepted file formats

Land Tax Online accepts the following formats:

  • PDFs
  • Images (JPG, PNG)
  • Word documents
  • Spreadsheets.

How to apply

To apply for an exemption, you must update your land tax details (lodge a return) in Land Tax Online.

Make sure you have all your supporting documents or information ready before you log in to your Land Tax Online account.

Log in to Land Tax Online

Read step-by-step instructions on how to apply, including what happens after your application is submitted.

Contact the land tax team

If you have a question about surcharge land tax, contact us.