Understanding payable duties
Recently the DE team received the below query about additional duties for foreign property purchasers:
“Hi, my name is Rebecca.
In April 2015, my parents wanted to buy an apartment in Bentleigh but as the release was for Australian residents only they were unable to sign the contracts. I signed the contract as and/or nominee and used the conveyancer they wanted, advising the conveyancer that my parents were the actual purchasers.
Unfortunately, the conveyancer did not prepare any paperwork for the nomination. I’ve been trying to get more information about whether they would have to pay extra duties (they’re still waiting for the PR application approval) as settlement is coming up in August 2017.
Will the duties be based on the date of settlement or from the day the contract is signed? They had expected their PR to have been approved by mid this year so this thrown an unexpected wrench in the works.”
Answer: Normally the duties payable by foreign purchasers will be calculated from the contract date. However, on the face of Rebecca’s preliminary email facts and because the nomination and transfer is occurring after 1 July 2016, Rebecca’s parents may attract an additional seven (7) percent duty on top of the land transfer duty.
This is called the Foreign Purchaser Additional Duty (FPAD). Therefore, the total duty payable by Rebecca’s parents will be the two (2) duties amounts combined. The FPAD varies according to the date of the contract, the date of nomination and the date of transfer. The percentage varies from nil up to seven (7) percent depending on the dates of the above events.
The FPAD only applies to contracts entered into after 1 July 2015.
If you have a similar situation, or need more clarification around FPAD, please contact Dangerfield Exley for a confidential chat.
Share on facebook
Share on twitter