Additional foreign acquirer duty for landholder duty
Additional foreign acquirer duty (AFAD) is an extra amount of duty that applies to certain relevant acquisitions for landholder duty. AFAD applies if:
- you are an acquirer for the purposes of the relevant acquisition and a foreign person
- the relevant acquisition is liable for landholder duty
- the land-holdings of the landholder include AFAD residential land
- the liability for the relevant acquisition arises on or after 1 October 2016.
For relevant acquisitions in private landholders, AFAD is imposed at a rate of 7% on the dutiable value of the relevant acquisition, based on the value of the AFAD residential land and the extent of foreign acquirer’s interest.
A private company has land-holdings in Queensland valued at $2,800,000. The unencumbered value of the AFAD residential land is $1,000,000. A foreign person acquires 60% of the shares in the private company.
The foreign person makes a relevant acquisition in the company. Landholder duty is calculated on 60% of the unencumbered value of the land-holdings in Queensland (60% × $2,800,000 = $1,680,000). Applying the transfer duty rate, landholder duty is $77,125.
The AFAD is $42,000 (7% × 60% × $1,000,000).
The total duty payable is $77,125 + $42,000 = $119,125.
A private landholder (a company) has Queensland commercial and residential land-holdings valued at $10,000,000. The value of the AFAD residential land component is $4,000,000. A married couple each acquire 50% of the shares in the landholder (a relevant acquisition). One spouse is an Australian citizen, while the other spouse is a foreign individual.
Landholder duty is calculated on the total unencumbered value of the company’s land-holdings in Queensland ($10,000,000). Applying the transfer duty rate, landholder duty is $555,525.
The AFAD rate of 7% will apply to the dutiable value of the AFAD residential land based on the foreign individual’s interest. The AFAD is $140,000 (7% × 50% × $4,000,000).
The total duty payable is $555,525 + $140,000 = $695,525.
For relevant acquisitions in public landholders, AFAD is calculated at a concessional rate. The applicable AFAD is 10% of the amount calculated by applying the normal AFAD rate (7%) that would be payable if all of the landholder’s AFAD residential land were transferred.
The A Property Trust is a listed unit trust that has land-holdings in Queensland of $200 million. The land-holdings include AFAD residential land valued at $50 million. B plc, a foreign corporation, acquires 90% of the units in A Property Trust.
Landholder duty is calculated as 10% of the amount of transfer duty that would be imposed on a dutiable transaction if a transfer of all of the Queensland land-holdings of the landholder happened at the time of the relevant acquisition. Transfer duty on a transfer of all of the landholder’s Queensland land-holdings ($200,000,000) is $11,480,525.00, and 10% of this amount is $1,148,052.50.
AFAD is calculated by applying 10% to the amount calculated by applying the normal AFAD rate (7%) to a transfer of all of the land-holdings that are AFAD residential land ($50,000,000). The AFAD is $350,000.
The total duty payable is $1,498,052.50 ($1,148,052.50 + $350,000.00).
Exemptions and concessions
If your relevant acquisition is exempt from landholder duty, it will also be exempt from AFAD.
The concession under section 173 of the Duties Act 2001 regarding the value of business property in family businesses does not apply to AFAD.
Reassessment of additional foreign acquirer duty
If AFAD is not imposed on a relevant acquisition, the acquisition must be reassessed to impose AFAD if both the following conditions apply:
- AFAD was not imposed because the acquirer was not a foreign corporation or a foreign trust.
- The acquirer becomes a foreign corporation or foreign trust within 3 years after the duty liability arises on the relevant acquisition.
- Read about additional foreign acquirer duty for corporate trustee duty transactions.
- Learn about additional foreign acquirer duty for transfer duty.