Ahead of the Queensland State Budget which is to be delivered on 14 June 2016, the Queensland Treasurer, the Honourable Curtis Pitt MP has announced that a 3% stamp duty surcharge will be applied to the acquisition of houses and apartments by foreign investors. The surcharge applies in addition to the usual transfer duty payable on such acquisitions (which is imposed at marginal rates of up to 5.75%).
Legislation to give effect to this proposal is not yet available. It is likely that the new surcharge will apply to agreements entered into on or after 1 July 2016. It remains to be seen whether there will be any transitional relief for agreements entered into on or after 1 July 2016 which arise from call options or put and call options which are entered into before that date.
This move follows the lead of Victoria which introduced a foreign purchaser additional duty of 3% from 1 July 2015 which was increased to 7% from 1 July 2016. There is also speculation that the New South Wales Government will announce additional property taxes for foreign investors in its upcoming budget on 21 June 2016.
It remains to be seen whether the scope of the proposed foreign purchaser surcharge in Queensland will extend to commercial residential premises such as hotels, motels, serviced apartments, retirement villages and similar properties. Although these types of real estate were not initially included within the scope of the foreign purchaser additional duty, the Victorian legislation is in the process of being amended to make the purchase of these kinds of real estate subject to foreign purchaser additional duty. On and after 1 July 2016, a foreign purchaser of these kinds of Victorian real estate will be subject to stamp duty at the rate of 12.5%.
Until the Queensland legislation is released, it will not be known how residential development sites will be treated. For example, if an industrial or commercial property is acquired and rezoned for residential purposes, will the surcharge apply? Under the Victorian legislation, foreign purchaser additional duty would generally apply to a site which is intended for residential development, although an exemption may be available in some circumstances. Hopefully the Queensland legislation will not operate as an impediment to residential development projects.