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Surcharge purchaser duty is an additional amount of duty payable by foreign purchasers who acquire residential-related property in NSW. On and from 1 January 2025, surcharge purchaser duty increased from 8% to 9% of the dutiable value of the property (often the purchase price). This increase makes it even more important for non-Australian citizens purchasing residential property in NSW to be aware of whether liability for surcharge purchaser duty will arise.
Who is a foreign person?
An individual is a foreign person if that individual is not an Australian citizen and is not ordinarily resident in Australia.
A corporation and trustee of a trust can also be a foreign person if a substantial interest in that corporation or trust (i.e. at least 20% interest) is held by a foreign corporation, a foreign government, or one or more individuals not ordinarily resident in Australia.
Meaning of ordinarily resident
An individual is ordinarily resident in Australia (and therefore not a foreign person) if, at the liability date (which is generally the date of exchange of contracts):
- the individual has been in Australia during 200 or more days in the period of 12 months immediately before the liability date (“200-day rule”); and
- at the liability date the individual’s presence in Australia is not subject to any limitation as to time imposed by law.
Individuals who hold a temporary visa are foreign persons (with the exception of New Zealand citizens on a Special Category visa) regardless of whether they have been in Australia for 200 or more days prior to exchange of Contracts.
Individuals who are permanent resident visa holders or New Zealand Special Category visa holders need to satisfy the 200-day rule to avoid being considered a foreign person.
Principal place of residence exemption
A permanent resident who has not satisfied the 200-day rule will be exempt from surcharge purchaser duty if the Chief Commissioner of State Revenue is satisfied that the person intends to use and occupy the property as a principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date (“residence requirement”). If the person fails to actually comply with the residence requirement, duty must be reassessed and surcharge purchaser duty will apply.
If you are looking to purchase property in NSW, contact PDC Law today to discuss how we can tailor our conveyancing services to suit your needs, ensuring you are well supported throughout the conveyancing process.
For further information regarding surcharge purchaser duty contact us at pdclaw.au or visit the Revenue NSW Surcharge Purchaser Duty Guide.
Sarah has practical experience and knowledge from working with the legal team across a range of areas of law, particularly in the areas of business sales and purchases and conveyancing transactions.
