Is your organisation eligible for a land tax foreign surcharge exemption in Victoria or Queensland?

Articles Written by Kathryn Bertram (Partner)
corporate building

Most Australian jurisdictions have introduced foreign surcharge duty on foreign purchasers who acquire residential land and surcharge land tax for foreign landholders on most landholdings (Victoria and Queensland) and residential landholdings (New South Wales (NSW), the Australian Capital Territory (ACT) and Tasmania). Foreign surcharges are payable in addition to ordinary stamp duty and land tax. Victoria and Queensland offer exemptions from the foreign surcharges for certain large organisations that make a significant contribution to the respective Victorian and Queensland local economies.

We outline in this article the foreign surcharges that are payable and the foreign surcharge land tax exemptions that are potentially available in Victoria and Queensland. Your organisation may also be eligible for an exemption from foreign surcharge duty, however, we have not considered this in this article.

What foreign surcharges are payable in Australia?

Between 1 July 2015 and 1 January 2019, all Australian states introduced surcharges to impose additional stamp duty on foreign purchasers of residential land. The ACT and the Northern Territory (NT) do not impose foreign surcharge duty. Tasmania also imposes foreign surcharge duty on acquisitions of primary production land. Foreign surcharge duty is imposed at rates of between 1.5%–8%, depending on the type of land and the jurisdiction.

In addition, Victoria, NSW, Queensland, Tasmania and the ACT have all introduced a foreign surcharge land tax which is payable in addition to land tax. In the ACT, NSW and Tasmania, this surcharge is generally only imposed in relation to residential landholdings. However, in Victoria and Queensland it applies to broader categories of land. This is imposed at rates of 0.75%–4%, depending on the jurisdiction.

The table below outlines the type of land that is subject to a surcharge and the current rates imposed by each jurisdiction.

Foreign surcharges imposed in Australia


Foreign surcharge purchaser duty

Foreign surcharge land tax


8% (residential land)

4% (all land over the relevant threshold)


8% (residential land)

4% (residential land)


7% (residential land)

2% (freehold land > $350,000)


7% (residential land)



8% (residential land) and 1.5% (primary production land)

2% (residential land)



0.75% (residential land)


7% (residential land)





Is an exemption from foreign surcharge land tax available? If so, how do you obtain an exemption?

In Victoria and Queensland, an exemption may be available for organisations that make a significant contribution to the relevant state economy. It is necessary to gather relevant information and documents and then make a formal application to the applicable revenue authority.

We outline some of the relevant criteria to be considered in applying for the exemption in Victoria and Queensland.


Who is liable to pay foreign land tax surcharge in Victoria?

In Victoria, foreign land tax surcharge is payable by an absentee owner. This includes a natural person absentee, an absentee corporation or a trustee of an absentee trust. This is known as absentee owner surcharge.

An absentee corporation is defined to mean a corporation that is incorporated outside Australia or a corporation in which an absentee person has an absentee controlling interest. A person has an absentee controlling interest in a company if the absentee person, or that person acting together with another absentee person:

  • can control the composition of the board of the corporation; or
  • is in a position to cast or control the casting of more than 50 per cent of the maximum number of votes that might be cast at a general meeting of the corporation; or
  • hold more than 50 per cent of the issued share capital of the corporation.

Is an exemption from absentee owner surcharge available?

The Victorian Government offers an exemption from foreign surcharges, including the absentee owner surcharge, for certain absentee corporations and absentee trusts that:

  • are Australian-based;
  • undertake commercial activities in Victoria which make a significant contribution to the Victorian economy and community by using local labour, materials and services; and
  • exhibit good corporate behaviour.

If an exemption is granted, the landowner will not have to pay the absentee owner surcharge. All other land taxes are still payable.

The Treasurer has released guidelines which outline the factors to be considered in granting an exemption. These include:

  • the nature and degree of an absentee person’s ownership and control of the corporation;
  • the practical influence to determine, directly or indirectly, the outcome of decisions of the corporation;
  • the effect of the practice or behaviour of the absentee person on the financial and operating decisions of the corporation;
  • the significant contribution to the Victorian economy and community made by an absentee corporation which includes:
    • the extent of commercial activities undertaken;
    • the number of local workers engaged;
    • the amount expended on local resources such as materials and services.

Note: there are specific criteria for absentee owners that undertaken commercial activities involving property development, including how the exemption applies in relation to build-to-rent projects;

  • good corporate behaviour including complying with:
    • any Foreign Investment Review Board (FIRB) requirements in relation to its landholdings;
    • Australian laws relating to the governance of the entity; and
    • Victorian tax laws.

Note: consideration will also be given to the corporate behaviour of other entities in which directors and shareholders of the absentee corporation have an interest.

What documents need to be provided to support the exemption?

Taxpayers applying for the exemption need to provide the State Revenue Office with various supporting materials including:

  • a statement on the business activities of the corporation and how those activities contribute significantly to the Victorian economy and community;
  • details on the extent to which the corporation uses Victorian labour and materials;
  • details on the absentee owner including documents detailing the ownership structure such as ASIC records and structure diagrams;
  • documents evidencing any prior FIRB approvals;
  • evidence of the corporation’s Victorian turnover for the last three years;
  • evidence of the persons ultimately in control of the decision making and the degree of their control over the company; and
  • any other information to support statements made in reference to the Treasurer’s guidelines.

Does the exemption apply retrospectively?

No. The exemption will only apply from the date the relief is granted.


Who is liable to pay land tax foreign surcharge in Queensland?

Foreign companies, trustees of foreign trusts and foreign persons may have to pay a land tax foreign surcharge. A foreign company is defined to include a corporation incorporated outside Australia or a corporation in which foreign persons have a controlling interest.

Foreign persons have a controlling interest in a company if the foreign person or related persons of the foreign person:

  • can control at least 50 per cent of the voting power in the corporation; or
  • can control at least 50 per cent of the potential voting power in the corporation; or
  • have an interest in at least 50 per cent of the issued shares in the corporation.

Is an exemption from land tax foreign surcharge available in Queensland?

The Queensland Government offers ex gratia relief from the land tax foreign surcharge on a case-by-case basis. If relief is granted, it will apply to all land owned by the foreign entity in Queensland.

The Queensland Revenue Office has release public ruling LTA00.4.2 which outlines the conditions that must be met to be eligible for ex gratia relief. This includes:

  • whether the foreign entity is Australian based, including whether:
    • it has a head office or principal place of business in Australia;
    • it has significant management staff and office presence in Australia;
    • it employs Australian citizens or permanent residents;
    • it carries on business in Australia;
    • there is a considerable level of Australian participation in the foreign entity that conducts activities in Australia;
    • it primarily contracts for services and materials of Australian contractors and suppliers to engage in its commercial activities in Australia,
  • where FIRB  approval was required, whether the entity had complied with all FIRB requirements;
  • whether the foreign entity has met regulatory requirements including complying with:
    • the Corporations Act 2001 (Cth) or equivalent legislation; and
    • Queensland taxation laws,
  • whether the entity conducts commercial activities that make a significant contribution to the Queensland economy and community, having regard to:
    • the size of the foreign entity’s commercial activities relative to their landholdings;
    • the number of local workers engaged;
    • the amount expended on local resources, such as materials and services;

                Note: there are specific rules for foreign entities whose commercial activities involve property development.

  • details on the commercial activities of a parent entity and any entity 100 per cent owned by the same parent entity; and
  • the extent of the commercial activities in Queensland.

What documents need to be provided to support the exemption?

The required documents include:

  • a statutory declaration containing, among other things, details of the basis on which the foreign entity satisfies the guidelines outlined in the public ruling;
  • copies of FIRB approvals or correspondence (where relevant);
  • ASX information and ASIC records to confirm regulatory requirements have been met;
  • evidence of committed future commercial activities including executed contracts and agreements, the grant of regulatory approvals, business plans, recruitment plans, capital raised; and
  • any evidence of matters asserted in the statutory declaration.

Does the exemption apply retrospectively?

Yes. In Queensland, taxpayers can apply for ex gratia relief retrospectively (up to five years) provided they can demonstrate they met the conditions at the time the liability for the foreign surcharge arose.

Next steps

We can assist you to determine whether a foreign surcharge is payable and to apply for an exemption if your organisation is eligible. 

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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