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Surcharge land tax exemption for Australian-based developers

Australian corporations that own and develop land in NSW for construction or subdivision may be eligible for an exemption or concession on surcharge land tax.

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What is an Australian-based developer?

An Australian corporation that owns and develops residential land into residential or commercial properties in Australia.

The corporation must:

Definition of residential land

Residential land includes any of the following:

  • Land containing one or more existing homes, or where homes are being built.
  • Individual strata units (lots) that are:
    • currently being legally lived in as separate homes, or
    • suitable to be legally lived in as separate homes.
  • Utility lots as defined in section 4 of the Strata Schemes Management Act 2015 that can only be used by the owner or occupier of a qualifying strata unit (as described in point 2).
  • Land use entitlements that give the holder the right to occupy a building or part of a building as a separate home.
  • Vacant land (or land the Chief Commissioner considers mostly vacant) that is zoned or designated for:

Important exclusions

Land used for primary production is not considered residential land, even if it meets any of the above criteria.

Surcharge land tax liability for foreign Australian-based developers

Foreign Australian-based corporations are liable for surcharge land tax in NSW unless an exemption or concession applies.

An Australian corporation is considered foreign when the shareholders of the company:

  • hold a substantial interest in the corporation, and
  • those shareholders are not ordinarily resident in Australia.

Definition of ordinarily resident

You are considered ordinarily resident in Australia for the purposes of surcharge land tax if you have been in Australia for at least 200 days in the previous calendar year, and:

  • you are currently in Australia and have no visa restrictions on how long you can stay, or
  • you have recently left Australia, but before departing, you had no time limit on your stay.

If you are unsure whether you qualify, consider seeking independent advice before submitting your declaration.

Eligibility for an exemption, concession or refund

An exemption or concession from surcharge land tax is available in the following situations:

  • The land is used for the construction and sale of new homes.
  • The land is being subdivided for the construction and sale of new homes.
  • For land that is used wholly or predominantly for commercial or industrial purposes by the corporation or a related body corporate.

Australian corporations that have not been granted an exemption or concession from surcharge land tax, may apply for a refund on the surcharge land tax already paid if the land has been used for one of the above purposes.

Land held in trust

When a property is held in trust by an Australian trustee company, it can qualify for the exemption, just as if it were held directly by an Australian corporation or its related body corporate.

Australian trustee companies are considered to fall within the scope of Australian corporations for this purpose.

Australian trustee companies must:

Need more detailed information?

Revenue Ruling G013 v2: Exemption from Surcharge for Certain Development by Australian Based Developers that are Foreign Persons provides more guidance on the surcharge land tax exemption for Australian-based developers.

Applying for an exemption, concession or refund

An Australian corporation must apply for an exemption, concession or refund with Revenue NSW. They are not automatically applied.

When to apply

Exemptions

If you think you qualify for the exemption you should apply (lodge a land tax return) by:

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

Refunds

An application for refund must be made:

  • within 12 months of the home being sold or the issue date of the subdivision certificate, and
  • no later than 10 years after the acquisition of the land.

The 10-year period applies to land acquired after 21 June 2016.

Supporting documents you will need to provide

Your application must include documents that prove that you meet the eligibility requirements of the exemption or concession.

Documents can be in these formats:

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

Accepted documents

Revenue NSW accepts the following documents:

How to apply for an exemption or refund

Tip

Make sure you have all the supporting documents ready before starting the online application.

You must apply for a refund or exemption in Land Tax Online via your MyServiceNSW Account.

Read more about how to apply for a land tax exemption.

Contact the land tax team

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