The Land Tax Act 2000 has been amended from 1 July 2022 to introduce a Foreign Investor Land Tax Surcharge (FILTS).
FILTS is 2% of the assessed land value of residential properties that are classified as ‘General Land’ under the Land Tax Act. (Note – this does not apply to land classed as ‘principal residence‘.)
The surcharge will apply to any interest in general class land in Tasmania that:
- is vacant land on which a building may be lawfully constructed and occupied as a place of residence so that the land is capable of being lawfully used, solely or primarily, for residential purposes; or
- is capable of being lawfully used solely, or primarily, for residential purposes; or
- includes a building, or part of a building, which is being, or has begun to be, constructed, refurbished, renovated or extended, if the work, when completed, will result in the land being capable of being lawfully used solely, or primarily, for residential purposes;
and which is:
- acquired by a foreign person on or after 1 July 2022; or
- owned by a company or trust which becomes foreign on or after 1 July 2022; or
- owned already by a foreign company or trust prior to 1 July 2022 if the foreign company or trust increases its percentage of ownership of the property on or after 1 July 2022.
For example, if you are a foreign person, or your foreign trust or company owns a residential property classified as general land which is valued at $600,000.00, you will be required to pay the FILTS amount of $12,000.00 in addition to the land tax you are already liable to pay.
The definition of ‘foreign person’ in the Land Tax Act has the same meaning as in the Duties Act 2001.
A foreign person may include:
- any person who is not an Australian citizen, holder of a permanent resident visa or a special category visa NZ citizen;
- any company which is incorporated outside Australia or in which a foreign person, foreign corporation or foreign trust has at least 50% interest or control;
- any trust in which a foreign person, foreign corporation or foreign trust has at least 50% beneficial interest in the capital of the trust.
For the purposes of the Land Tax Act, it is important to note that:
- any company or trust is deemed foreign unless sufficient evidence is provided to the State Revenue Office evidencing otherwise; and
- discretionary trusts with a general class of beneficiaries are likely to be deemed foreign unless they specifically exclude foreign persons from being a beneficiary.
If you have any queries, or would like further information regarding this article, please contact:
David Shelley
Managing Principal
M: 0427 183 217
E: dshelley@pageseager.com.au
Daniel Morgan
Principal
M: 0438 436 968
E: dmorgan@pageseager.com.au
Published: 17 August 2022
