Tasmania Introduces Bill to Increase Property Surcharges for Foreign Investors

Tuesday 3 December 2019 @ 11.37 a.m. | Corporate & Regulatory | Legal Research | Taxation

On 12 November 2019, the Duties Amendment Bill 2019 (Tas) (the “Bill”) was introduced to Tasmania’s House of Assembly (the “Assembly”) by the Hon Peter Gutwein. The Bill passed the Assembly on 26 November 2019 and was immediately introduced to the Legislative Council (the “Council”) on the same day. The Bill, which proposes amendments to the Duties Act 2001 (the “Act”), is currently before the Council and.

Background

The Examiner indicates the purpose of the Bill is to “increase the surcharge for foreign investors purchasing residential properties in Tasmania ...”

The proposed amendments “will increase the Foreign Investor Duty Surcharge from 7 per cent to 8 per cent, in line with Victoria and NSW.”

The Bill will amend provisions relating to the definition of a “foreign person” to ensure the only persons, companies and trusts that are genuinely foreign pay the surcharge.

Overview of the Amendments

Proposed amendments to the Act include:

  • retrospective amendment to section 4C;
  • amending section 30C and section 30E;
  • new sections 30HA, 30HB and sections 30J, 30K, 30L and 30M inserted to the Act; and
  • insertion of new section 259G.

Comment and Reaction to the Bill

During the Minister’s speech to Parliament he said:

“… the Government introduced the Foreign Investor Duty Surcharge in 2018 on acquisitions of residential and primary production property to address the increasing demand from foreign investors for Tasmanian property and to assist local buyers to remain competitive in the housing market … this Bill amends the Duties Act 2001 to better reflect the policy intent of the Foreign Investor Duty Surcharge. It will help ensure that only persons, companies and trusts that are genuinely foreign are charged the surcharge.”

Mr Gutwein said the Government considered the rates to be fair, reasonable and consistent with surcharges in other jurisdictions:

"While the government welcomes foreign investment in Tasmania, it is important to ensure that foreign investors in Tasmania contribute their fair share and that the property market remains accessible to Tasmanians."

Labor Finance spokesperson David O'Byrne  said the Bill needed to strike the right balance between ensuring fair taxes are levied on investors who are able to afford it and making sure foreign investors are not driven away. He said:

“… When we have bills such as this it's important to think through the consequences.”

Cassy O'Connor from the Tasmanian Greens said in a Media Release:

“We will not be opposing the Duties Amendment Bill 2019. We regard this legislation as a sop to growing public concern about the level of foreign ownership in Australia and in Tasmania … According [to] the ABS statistics, around a quarter of Tasmania's agricultural land is foreign owned. In the north-west coast region of Tasmania, more than 30 per cent of our prime agricultural land is owned by foreign interests.”

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