NSW foreign land tax and duty surcharges legally deficient – refunds due!

Revenue NSW has confirmed that its foreign land tax and duty surcharge provisions are inconsistent with Australia’s tax treaties with New Zealand, Finland, Germany and South Africa. Refunds may be available for property acquirers and landowners who have previously paid NSW surcharge duty or surcharge land tax.

What do I need to know?

Duty and land tax surcharges may be refundable if the surcharge arose because you were a New Zealand, Finnish, German or South African citizen. This extends to entities that were deemed foreign persons by reference to individuals from those countries.

This solely applies to land tax and duty surcharges paid or payable:

• to Revenue NSW
• on and from 1 July 2021.

You will need to apply to Revenue NSW for the refund.

Does it apply to residents of other countries?

The press release currently applies to the four countries listed.

Revenue NSW has not yet released the basis on which it has made the determination and a refund is applicable solely to residents of those four nations. It should be noted that, of those nations, each tax treaty (commonly referred to as a double tax agreement or DTA) contains a non-discrimination clause, which provides the two countries will not impose a tax of any kind that discriminates against nationals (or citizens) of the other country.

This will be a growing area of interest as there are several other countries not listed in the press release whose DTAs with Australia contain similar non-discrimination articles. We await further clarification of these provisions and their application to the land tax and duty surcharge.

Does this apply to other states and territories?

No. The press release applies solely to NSW imposed foreign land tax and duty surcharge.

However, the principle will apply to any land tax or duty surcharge that has been imposed on the basis of nationality.

We have not yet heard from other state and territory revenue offices (that impose surcharge land tax and duty on foreigners). It is reasonable to expect those revenue authorities will release their position (agreeing or disagreeing with the NSW position) in the short to medium term.

Does this mean my foreign land tax or duty surcharge is refundable in other states?

Potentially yes, if you are a resident of a country with a DTA (with Australia) that contains a non-discrimination clause with broad application.

As more information is released from each relevant state and territory revenue office, we will keep you updated.

A copy of the Revenue NSW press release is available here (link).

What should I do now?

If you have received a land tax or duty surcharge and would like to discuss your circumstances, please contact us for a confidential discussion.