The Berejiklian Government has introduced a Bill into the NSW Parliament which may change the way surcharge purchase duty and surcharge land tax applies to foreign developers.
If passed, the Bill will provide that foreign-owned developers may be allowed a refund of the 8% purchase duty surcharge, and the 2% land tax surcharge, provided the land is acquired via a company incorporated in Australia and the development project is completed within 10 years. This represents a 5 year extension of the development requirement.
The Bill also proposes an upfront exemption for qualifying foreign-owned developers. This upfront exemption will require the foreign developer to obtain pre-approval as an exempt transferee and that approval must be in place when the liability for duty arises. If pre-approval is not obtained, the foreign developer will only be able to seek a refund of the surcharge once the project is eventually completed and any requirements for exemption have been satisfied. The pre-approval may be subject to certain conditions (eg, undertaking the proposed development) and may involve claw-back of the unpaid surcharge and additional penalties if those conditions are not met.
The Bill was passed by the Legislative Assembly on 14 November 2017 and was then introduced in the Legislative Council on 15 November 2017, but is yet to be debated in the upper house.