What Is Additional Foreign Acquirer Duty (AFAD)?
The Additional Foreign Acquirer Duty (AFAD) is an extra Transfer Duty applied to individuals purchasing residential property in Queensland who are not Australian Citizens or Permanent Residents.
Whether the land is acquired for investment or non-investment purposes, foreign buyers are now obligated to pay an additional 7% transfer duty to the government when acquiring residential land in Queensland.
Who is a Foreign Buyer?
The Foreign Ownership of Land Register Act 1988 (Qld) outlines the definition of a foreign buyer as:
- A foreign individual characterised as a person who is neither an Australian citizen nor a permanent resident of Australia.
- A foreign corporation, denoting a company incorporated outside of Australia or a corporation where foreign individuals control a minimum of 50% of voting power or shares.
- A trustee of a foreign trust, subject to criteria detailed in section 237 of the Duties Act 2001 (Qld).
If you fall into any of these categories, you are designated as a foreign buyer and must pay the Additional Foreign Acquirer Duty of 7% to the Queensland Revenue Office, on top of your existing transfer duty obligations outlined in the purchase contract.
When is AFAD Applicable?
The 7% Additional Foreign Acquirer Duty applies to residential land which includes:
- Homes and apartments.
- Vacant land designated for the construction of homes and apartments.
- Land earmarked for development, including smaller unit blocks, housing subdivisions, or projects with a residential component.
- Buildings undergoing refurbishment, renovation, or extension for residential purposes.
How is AFAD Calculated?
AFAD will only apply to the portion of the property being purchased by the foreign buyer. This is relevant in situations where a foreign buyer is purchasing a property jointly with an Australian citizen or permanent resident. In these instances, AFAD is imposed solely on the foreign buyer’s interest in the property, rather than on the entire purchase price.
For instance, when a foreign individual buys a property jointly with an Australian citizen or permanent resident the AFAD payable will be determined solely on the foreign buyer’s 50% stake in the property.
I’m a New Zealand Citizen, do I need to pay AFAD?
AFAD is not applicable to New Zealand citizens holding a special category visa when entering transactions involving AFAD residential land.
| Example | Does AFAD apply? |
| A New Zealand citizen residing in Australia and holds a special category visa purchases AFAD residential land. | No |
| A New Zealand citizen who resides in New Zealand purchases AFAD residential land in Queensland. | AFAD will apply, because the individual will not be the holder of a special category visa under the Migration Act. |
| A New Zealand citizen currently residing in New Zealand enters Australia and seeks to obtain a special category visa so that AFAD will not apply. | AFAD may apply if evidence to the Commissioner of State Revenue indicates entry into Australia was to avoid paying AFAD by obtaining a special category visa. |
| A New Zealand permanent resident enters purchases AFAD residential land in Queensland. | AFAD will apply since the New Zealand permanent resident will not hold a special category visa. |
Unsure if AFAD will Impact your Property Purchase?
If you’re considering purchasing property in Queensland and are uncertain about whether the Additional Foreign Acquirer Duty (AFAD) will affect you, or if you’re seeking additional guidance on this matter, please don’t hesitate to call one of our property law solicitors on 1300 911 137 or contact us via our website.. Our team members are accessible across Brisbane, Sunshine Coast, Gold Coast, and Bundaberg, providing assistance from the bush to the beach.
