New exemptions and refunds for surcharge purchaser duty and surcharge land tax in New South Wales were introduced last year, and our lawyers have had hands-on experience with the operation of this regime. Here, Mark Lyons reviews the operation of the scheme and reminds Australian developer companies who are foreign persons that the scheme may provide a significant and timely boost to cash flow.
In March 2018 we published an article about the introduction of the new concessions. Since then the New South Wales government has established an exemption and refund regime for these taxes to encourage the construction of new homes.
An exemption or refund may be available to Australian developer companies who are foreign persons and use the property for—
Applications for exemptions and refunds must be made in writing to the Chief Commissioner of State Revenue who will assess the application against a variety of criteria and additional eligibility requirements.
Some examples of key assessment criteria include—
Exemptions may be obtained well before construction has commenced where the Commissioner is satisfied the foreign person is likely to meet the eligibility requirements for a refund.
If the application is approved, Australian developer companies are not required to pay surcharge purchaser duty and surcharge land tax at the time the liability for those items arises.
The Commissioner may approve the Australian developer company for an exemption relating to multiple property acquisitions and multiple tax years.
Australian developer companies who have already made payment of surcharge purchaser duty or surcharge land tax can apply for refunds of the taxes paid.
Refunds are also available where the property was acquired before the exemption and refund regime was introduced. This allows developers to apply for refunds for acquisitions which may date back several years to when the surcharges were introduced.
Generally, an application for a refund must be made by the earlier of—
For acquisitions occurring before 21 June 2016, developers must apply for a refund of surcharge land tax before 21 June 2021.
If you are—
Our Real Estate lawyers can help prepare an application for an exemption or refund of surcharge purchaser duty and surcharge land tax.