Foreign stamp duty surcharge of 7 per cent introduced in South Australia

By Adrian Chek
International Business Obligations Property & Development Tax

In brief

South Australia has introduced a stamp duty surcharge of 7 per cent for direct and indirect acquisitions of residential land by foreign purchasers, with effect from 1 January 2018. Partner Adrian Chek and Summer Clerk Emma Croft report on the surcharge, and summarise the position across Australia.

How does it affect you?

  • South Australia has introduced a 7 per cent stamp duty surcharge on direct and indirect interests acquired in residential land by foreign purchasers. The surcharge commenced on 1 January 2018.
  • Whether property falls within the definition of 'residential land' is determined by the Commissioner in each case, but it will generally include land being used, or having the potential to be used, for residential purposes.
  • 'Foreign purchaser' includes natural persons who are not Australian citizens or permanent residents; and corporations incorporated outside Australia, or in which a foreign person has a majority interest. It also includes trusts in which at least 50 per cent of the capital is held for a foreign person.
  • Those acquiring entities that become a foreign person within three years of the acquisition of the interest will also be subject to the surcharge.

When does the surcharge apply?

The surcharge will apply, in addition to normal transfer duty or landholder duty, where a foreign person, or a trustee of a foreign trust, acquires an interest in residential land. It will not apply where the acquisition is exempt from duty.

By contrast with states such as Victoria, it does not apply to the sale of non-residential property that the purchaser intends to redevelop as residential property. However, it is necessary to consider the definition of 'residential land', discussed below, which takes into account the zoning of the subject land and relevant planning laws.

In a case where the foreign person acquires a partial interest in the land or landholder, the person will be liable to pay the surcharge duty on the partial interest. Where a foreign person or group acquires an interest jointly with another party who cannot be classified as 'foreign', the surcharge will only apply to the extent of the foreign person's interest in the land or landholder entity.

The surcharge applies to dutiable instruments executed on or after 1 January 2018, or, in the case of landholder duty, to dutiable transactions entered into on or after that date. Therefore, contracts entered into before this date that have a settlement date later than 1 January 2018 will be subject to the liability to pay the surcharge, as it is the transfer that triggers the liability.

Definition of 'foreign person' and 'foreign trust'

The South Australian definition of 'foreign person' broadly aligns with that in Queensland and Victoria, encompassing:

  • an individual who is not an Australian citizen or holds a permanent visa or special category visa as a New Zealand citizen;
  • a corporation incorporated outside Australia; and
  • a corporation in which a foreign person (falling within the definition above), trustee for a foreign trust or group of foreign persons holds at least 50 per cent of the corporation's shares or may cast, or control the casting of, 50 per cent of the maximum votes at a corporation's general meeting.

A 'foreign trust' is either a fixed trust where at least 50 per cent of the capital of the trust property is held beneficially for one or more foreign persons; or a discretionary trust where the trustee, a beneficiary or a person with power to appoint property is a foreign person.

This is not as broad as the New South Wales definition, which adopts the FIRB definition of 'foreign person'. Further, it permits a refund of duty paid where a foreign person or trust ceases to be classified as 'foreign' within a year of the transaction.

On the other hand, where a purchaser subsequently becomes a foreign person within three years of obtaining the interest, the surcharge will become payable on the date this occurred, unless they have sold or transferred their interest before becoming a foreign person, or paid the surcharge on the transaction that rendered the person a 'foreign' person or the trust a 'foreign trust.' If only one of the owners of a corporation owning property becomes a foreign person, the surcharge will be calculated according to the interest of that person. Persons to whom this provision applies are subject to an obligation to notify the Commissioner of this change in status within 28 days.

Surcharge rate

The South Australian Government has set the rate of surcharge at 7 per cent of the market value of the interest acquired in residential land. Originally, the surcharge rate was to be set at 4 per cent. However, this was increased when the Government abandoned the proposed South Australian bank levy.

Residential land

The surcharge only applies to residential land. Land will be taken to be residential if, after taking into account information that the Valuer-General has provided, the Commissioner determines that:

  • it is predominantly being used for residential purposes;
  • although it is not being used for any particular purpose at the time, it should be taken to be used for residential purposes, due to improvements that are residential in character having been made to the land; or
  • although it is vacant, or vacant with only minor improvements, the land is within a zone that envisages the use, or potential use, of the land for residential purposes according to planning and development law. However, if the land zoning indicates that it could be used for some other purpose (other than primary production) that is compliant with planning laws, the vacant land will not be taken to be used for residential purposes.

Residential land that is used for a commercial purpose will not be subject to the surcharge. According to Revenue SA in Information Circular No. 86, hostels, hotels, motels, serviced apartments and short term unit accommodation will be considered to be 'commercial in nature'. On the other hand, on its website Revenue SA states that retirement villages, aged care facilities and other residential premises that can best be described as 'long term accommodation' do not fall into this exception and will be categorised as 'residential'.

Comparison of foreign purchaser surcharges in Australian jurisdictions

The following table sets out the surcharge rates of the foreign purchaser surcharge and land tax surcharge for foreign and/or absentee owners imposed in other Australian states, as well as the duty surcharge imposed in NSW for premium property. 'Absentee owners', in some states, has a similar definition to 'foreign purchasers' but also requires that the person be away from the property for a set time period.


Foreign ownership surcharge

Premium property duty

Land tax surcharge



All purchasers are subject to a premium rate of duty of $150,490 plus $7 for every $100 by which the dutiable value of the residential land exceeds $3 million.2

Foreign persons are subject to a surcharge of 2% of the taxable value of the residential land3 unless it is their principal place of residence.



Absentee owners (persons that are not citizens or residents that have been absent from Australia for at least six months of the previous 12-month period) are subject to a surcharge of 1.5% for each $1 of taxable land value greater than $349,999.5



Absentee owners are subject to a surcharge of 1.5%.
From 1 January 2018, owners of properties located in the inner and middle suburbs of Melbourne are also subject to a surcharge of 1% of the property's taxable value if it has not been used or occupied for a period of at least six months in the year preceding the tax year.7




commencing 1 Jan 2019

Unlike some other jurisdictions, South Australia has not paired the implementation of the foreign purchaser surcharge legislation with the introduction of a land tax surcharge.

Next steps

After an initial reluctance to do so, South Australia has now introduced the foreign purchaser stamp duty surcharge, and aligned itself with the position of the majority of other Australian states.

Purchasers of South Australian land or landholder entities need to consider whether any surcharge is payable for that land; this will require them to consider whether they are a 'foreign person' or 'foreign trust', and whether the land falls within the 'residential land' definition. Purchasers must also be aware of their obligations to notify the Commissioner if they subsequently become a foreign person or foreign trust.


  1. Duties Act 1997 (NSW) s104U(1).
  2. Duties Act 1997 (NSW) s32A.
  3. Land Tax Act 1956 (NSW) s5A.
  4. Duties Act 2001 (Qld) s244.
  5. Land Tax Act 2010 (Qld) Sch 3 Pt 2.
  6. Duties Act 2000 (Vic) s28A(2).
  7. Land Tax Act 2005 (Vic) Div 6 (when amendments commence).
  8. Stamp Duties (Foreign Ownership Surcharge) Amendment Act 2017 (SA) s72(3).
  9. Western Australia State Budget 2017–18.