OSR releases foreign investor tax FAQs

The Queensland Office of State Revenue has released a FAQ document on the Government’s new additional foreign acquirer duty, due to come into effect on 1 October. While the document provides some much needed clarity around calculation and application, it also confirms the broad impact that the new tax will have on Queensland’s property industry.

OSR have interpreted the legislation’s definition of ‘residential land’ to not include land used for hotel and motel purposes. However, they have advised that retirement villages and student accommodation may be subject to the new tax and will need to be assessed on a case-by-case basis.

The document has also provided further clarity on who OSR will consider a ‘foreign acquirer’. Despite loose language in the legislation around ‘related persons’ of foreign individuals, OSR will not consider a corporation or trust ‘foreign’ due to a related foreign connection unless the foreign connection controls an interest in the corporation or trust.

In the event that a company or trust becomes foreign controlled, the OSR have confirmed that they will be subject a retrospective reassessment for foreign acquirer duty on their last 3 years’ worth of residential transactions.

The FAQ sheet notes that “there may be some land acquisitions for developments where it would be appropriate to exempt from AFAD liability in Queensland.” However, OSR stop short of ruling-in a Victorian style exemption process for locally based companies who provide a significant community benefit – noting that potential exemption rules “will need to be considered on a case by case basis by government”. 

The Government has committed to consult with the Property Council in the development of the guidelines to accompany this new tax which may include a mechanism for exemption applications.

The Property Council has been clear in its warning to the Government that this new “foreign” tax will capture some of Queensland’s largest and best known development companies, which collectively employ thousands of Queenslanders.  

Additional foreign acquirer duty represents a significant, and immediate, risk to property investment in Queensland.