As you may be aware, the State Taxation and Other Acts Amendment Bill 2016 (“Bill”) was first put before Parliament for approval in April of this year. The Bill received Royal Assent from the Governor of Victoria on 28 June 2016, meaning that it has now become legislation – the State Taxation and Other Acts Amendment Act 2016 (Vic) (“Act”).
Part 2 of the Act amends the Duties Act 2000 (Vic) with respect to the additional foreign purchaser duty payable by foreign purchasers of residential property in Victoria.
The amendments made by the Act mean that:
- the amount of additional foreign purchaser duty is increased from 3% to 7% of the price of a residential property with effect from 1 July 2016; and
- the definition of ‘residential property’ is changed such that the additional foreign purchaser duty will no longer apply to the acquisition of additional types of property, including commercial residential premises (such as hotels, student accommodation and serviced apartments), residential care facilities and, importantly, retirement villages.
This concession marks a positive change for the retirement living sector, in particular, as the Act has explicitly narrowed the scope of the additional foreign purchaser duty to just the more traditional forms of residential property.