Annual Vacancy Fee (New Tax) – Foreign Property Owners
In December 2017, the Australian Government introduced an Annual Vacancy Fee for foreign owners of residential dwellings.
Essentially, this is a new tax on property where a dwelling is not residentially occupied or rented out for more than 183 days (six months) in a year. It is also a new lodgement requirement which is separate from your income tax requirements and not handled by your accountant (unless specifically instructed, as it does not form part of the tax return).
The Annual Vacancy Fee may apply to you if:
- You are a foreign resident.
- A foreign investment application was made after 9 May 2017 (property was purchased after that date through the Foreign Investment Review Board) or under a New Dwelling Exemption Certificate that a developer lodged.
Other important items to note:
- You will be sent an email reminder to lodge the form based on your application with the FIRB. You will also have received information about this fee on purchase.
- The property must have a dwelling on it (doesn’t apply to vacant land).
- A dwelling must be a residential dwelling, which the FIRB usually determine on purchase.
- You must lodge the form, whether it has been occupied or not within tight deadlines.
- The Vacancy Fee year runs for the 12 month period from acquisition/occupancy certificate date (not the tax year).
- Short term stays (such as AirBNB, Stayz, Holiday) do not qualify as residential occupation and accordingly, you would be liable for an Annual Vacancy fee if you holiday let a residential dwelling.
The vacancy fee/tax is the same fee paid through the Foreign Investment application process on purchasing the property. Accordingly, that fee becomes an annual fee if the dwelling is vacant under the vacancy fee rules.
More information can be found here https://www.ato.gov.au/General/Foreign-investment-in-Australia/Annual-vacancy-fee/
Need help and want more information? Call Holmans for assistance on (07) 5430 7600 or send us an email.