As part of the 2015-16 State Budget, the Victorian Government introduced additional duty for foreign purchasers and an absentee owner land tax surcharge.
The 3 per cent additional duty will apply to foreign purchasers when they buy or acquire residential property in Victoria, either directly or indirectly. This additional duty, which is in addition to any stamp duty or landholder duty payable, is proposed for contracts entered into (or a relevant acquisition made) on or after 1 July 2015.
A 0.5 per cent absentee owner land tax surcharge will apply to land owned by absentee persons. This surcharge, which is in addition to any land tax payable, is proposed to commence from the 2016 land tax year.
The State Taxation Acts Amendment Bill 2015 (the Bill), which is currently before the Victorian Parliament, will give effect to these measures upon passing both Houses of Parliament and receiving Royal Assent.
The Bill includes provisions that enable the Treasurer, in certain circumstances, to exercise discretion to exempt certain entities from being subject to the additional duty and the surcharge having regard to a number of general principles and relevant circumstances. These principles and circumstances are outlined in the Bill.
The Government has also drafted guidelines (foreign purchaser additional duty and absentee owner land tax surcharge) that will inform the exercise of the discretion in the Bill. These guidelines are intended to assist taxpayers understand the circumstances in which the Treasurer may exercise the discretion once the legislation has been enacted.