Alert: Foreign buyers beware – increased AFAD rate for Queensland
The recently announced Queensland Budget 2018 has signalled an increase to the additional foreign acquirer duty (AFAD) from three percent to seven percent for transactions entered into from 1 July 2018.
What is AFAD?
AFAD is an additional duty, calculated on the dutiable value of a property, which applies in addition to the standard rate of transfer duty where—
- the buyer is a 'foreign person' (which includes individuals, corporations and trusts), and
- the transaction involves 'residential land' (which includes vacant land on which a home or residential development will be built).
Unique to the Queensland regime, AFAD is also reassessed on dutiable transactions where a (previously non-foreign) buyer becomes a foreign buyer within three years of the original liability date. Please click here for an article by lawyer Luke Hefferan detailing the reassessment process.
What should you do next?
With the AFAD increase commencing very shortly, foreign buyers (or a buyer which may be deemed 'foreign' within three years due to a restructure) should consider the possibility of "fast tracking" relevant transactions so they are entered into before 1 July 2018 to avoid the increased AFAD burden.
Alternatively, affected buyers should factor in the additional AFAD costs when calculating the viability of any relevant transactions to be entered after 1 July 2018.
If you have any queries about the AFAD regime and how it affects your business transactions please contact a member of our Real Estate team.
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