In December 2017, Australian Government introduced an annual vacancy fee for foreign owners of residential dwellings.
All foreign owners of residential dwelling in Australia are required to pay an annual vacancy fee if their dwelling is not residentially occupied or rent out for more than 183 days (6 months) in a vacancy year or fail to lodge the annual Vacancy fee return by due date.
The new legislation only applied for the applicant who lodge the FIRB Application or New Dwelling Exemption Certificate after 7:30p.m. on 9 May 2017.
A dwelling is considered residentially occupied if, for at least 183 days in a vacancy year, any of the following circumstances are met:
· the owner or a relative of the owner genuinely occupied the dwelling as a residence;
· the dwelling was genuinely occupied as a residence subject to lease or license with minimum duration of 30 days;
· the dwelling was genuinely available as a residence on the market with minimum duration of 30 day terms at a market rent.
If you can show that for at least 183 days in a vacancy year, your dwelling was in capable of being occupied as a residence then you will not be liable to pay the vacancy fee. However, you must lodge a vacancy fee return to claim this exemption.
Your dwelling may be also considered incapable of being occupied as a residence if:
· the dwelling is damaged, unsafe or is otherwise unsuitable to be occupied as a residence;
· the dwelling is undergoing substantial repairs or renovations;
· occupation of the dwelling as a residence is prohibited or legally restricted, by an order of a court or tribunal or a law of the Commonwealth, state or territory; or
· a person (who may or may not be the foreign person) who ordinarily occupies the dwelling was absent from the dwelling due to receiving long-term, in-patient, medical or residential care.
The vacancy year is the period of 12 months starting on the occupation day for the dwelling.
Foreign owners must lodge their vacancy return with Australia Taxation Office within 30 days of the end of each vacancy year.
Vacancy fee will generally be the same amount as the FIRB application fee paid at the time they submitted FIRB application.
If you do not lodge your vacancy fee return by the due date you may be liable to pay a vacancy fee regardless of the number of days the dwelling was residentially occupied during the vacancy year.
You may be liable for a penalty if you fail to lodge the return by due date or fail to keep the records for 5 years. The penalty will be applied up to $52500 for Individual and $262500 for company.
There are a few important tips need to be kept in mind for foreign investors/owners.
· Must lodged FIRB application before purchasing the property
· Must register on the Land & Water Register within 30 day of settlement
· Will receive an email reminder to lodge vacancy fee return
· Must lodge vacancy return within 30 days of each vacancy year
Any further inquires in relation to the Annual Vacancy Fee, please feel free to contact our office.