Foreign persons includes natural persons and corporations.

For information on natural person see our Foreign Person page.

What is a Foreign Corporation?

A corporation is foreign where it is either:

  • incorporated in a jurisdiction that is not an Australian jurisdiction; or
  • a person who is a foreign person or a trustee for a foreign trust, or a number of such persons in combination:
    • hold(s) 50% or more of the corporation’s shares; or
    • is or are entitled to cast, or control the casting of, 50% or more of the maximum number of votes at a general meeting of the corporation.

Example 1

Andrew and Beatrice are foreign persons who separately hold 25% each of Company Pty Ltd’s shares (50% in total). Company Pty Ltd is therefore a foreign person and is liable to pay a surcharge on an acquisition of an interest in residential land.


Will any surcharge paid be refunded where a corporation ceases to be foreign?

A refund of a surcharge paid is available where:

  • a corporation was foreign at the time of the acquisition of an interest in residential land, but then ceases to be a foreign corporation; or
  • a person, or combination of people, who holds 50% or more shares or voting rights (see ‘what is a foreign corporation’ was a foreign person at the time of the acquisition of an interest in residential land, but then ceases to be a foreign person;

not more than 12 months after the interest in the residential land was acquired.

The foreign corporation can apply to RevenueSA for a refund of the foreign ownership surcharge if the corporation ceases to be foreign not more than 12 months after the acquisition of the interest. See Section 72(5) of the Stamp Duties Act 1923.

refund form (PDF 235KB) will need to be completed.


Example 2

Global Corporation is a foreign entity. Regional Pty Ltd is not a foreign entity.

In the case of a land holder acquisition under Part 4, Global Corporation and Regional Pty Ltd, as a group, acquire 100% (50% each) of the shares in a land holding entity and thereby notionally acquire an interest in residential land.

Land holder duty was paid on the acquisition of the 100% interest. Global Corporation further paid the surcharge on the acquisition of its 50% interest.

Global Corporation ceases to be a foreign entity within 12 months after the acquisition and retains its interest in the interest notionally acquired by the group.

Whilst the land holder duty paid on the acquisition remains payable, upon application by Global Corporation, a refund of the surcharge also paid is due.


What happens when a corporation becomes a foreign corporation within 3 years after the acquisition?

The surcharge will be retrospectively imposed where a corporation becomes a foreign corporation within 3 years of the acquisition of the interest in residential land. Where this occurs:

  • the Commissioner must be notified in writing that the person became foreign within 28 days
  • a surcharge is payable on the instrument or, in the case of an acquisition under Part 4, the transaction
  • the surcharge is to be regarded as having become payable when the corporation became a foreign corporation; and
  • interest and penalty tax may apply as if the failure to pay the surcharge at the date of the acquisition were a tax default under the Taxation Administration Act 1996.

However, where a surcharge has been paid or is payable in respect of the transaction by virtue of which the corporation became a foreign corporation, the surcharge is reduced by the amount of the surcharge paid in respect of the transaction by virtue of which the corporation became a foreign corporation.

The reduction is in essence a rebate that ensures that 2 surcharges are not payable as a result of a transaction.


Example 3

Local2Global Pty Ltd is a corporation incorporated in an Australian jurisdiction, such that it is not a foreign corporation.

On 1 July 2018, Local2Global Pty Ltd acquires residential land valued at $1,000,000 and is a land holding entity for the purposes of Part 4.

On 31 July 2018, Eddie, a foreign person acquires 50% of the shares in Local2Global Pty Ltd.

Eddie thereby acquires a prescribed interest in a land holding entity for the purposes of Part 4, with its 50% interest of $1,000,000 being valued at $500,000.

As a result of the acquisition, Local2Global Pty Ltd also becomes a foreign corporation, with 50% of its shareholding being held by Eddie.

The acquisition results in the following three amounts of duty being payable:

Land Holder Duty (i) :  $21,330

Surcharge (7% of $500,000) (ii) : $35,000

Surcharge (7% of $1,000,000) (iii)   :  $35,000

TOTAL PAYABLE : $91,330

(i) Eddie is liable to pay land holder duty on the acquisition of Eddie’s prescribed interest in Local2Global Pty Ltd (50% of $1,000,000 being $500,000).

(ii) Eddie is liable to pay a surcharge on the acquisition of Eddie’s prescribed interest in Local2Global Pty Ltd (7% of $500,000).

(iii) whilst a surcharge of $70,000 (7% of $1,000,000) would otherwise be payable as a result of Local2Global Pty Ltd becoming a foreign corporation, the amount of the surcharge payable ($70,000) is reduced by the amount of the surcharge payable in respect of Eddie acquiring the prescribed interest in Local2Global Pty Ltd ($35,000). As such, the surcharge payable is $35,000.


If a non-foreign corporation becomes a foreign corporation within 3 years, is it their responsibility to advise RevenueSA?

If within 3 years of the acquisition of the interest in residential land the acquirer becomes a foreign corporation, the Commissioner must be notified in writing within 28 days of becoming foreign.

The onus is on the acquirer to notify the Commissioner in writing within 28 days of becoming foreign.

When does the 3 year period for changing from non-foreign to foreign start?

The period starts from the date of acquisition of the property, that is, the settlement date.

How will RevenueSA monitor if a company becomes a foreign company within 3 years of purchasing a property?

RevenueSA’s Compliance Services branch obtains information from various sources, including the ATO, ASIC, FIRB, the Department of Home Affairs, the Department of Immigration and Border Protection. Such information can be used to identify potential tax defaults.

The onus is on the foreign person (which includes a company) to notify the Commissioner of State Taxation in writing of becoming a foreign person or foreign trust within 28 days of becoming foreign.

Is the surcharge payable if the corporation ceases to have the interest in the residential land prior to becoming a foreign corporation?

A surcharge is not payable if the interest in the residential land was conveyed or transferred by the corporation before the corporation became a foreign corporation.

If Australian Company A acquires land in February 2018 and pays no foreign ownership surcharge then Foreign Company B acquires a 50% interest in Company A in December 2018, what foreign ownership surcharge is payable?

See the example above about “Local2Global Pty Ltd” which provides an example of what foreign ownership surcharge is payable.

In summary, by virtue of Foreign Company B acquiring a 50% interest in Company A (a land holding entity), Company A becomes a foreign person (person includes companies) within 3 years of the acquisition of the residential land in February 2018.

As such, both landholder duty and the foreign ownership surcharge are payable on the 50% landholder acquisition (by Company B). Whilst foreign ownership surcharge is also payable on the full value of the February 2018 land acquisition (by Company A), the amount payable is reduced (with the reduction in essence being a rebate) by the foreign ownership surcharge paid in respect of the landholder acquisition.

When a foreign person signs a contract but their representative (for example, Attorney) provides the VOI and Client Authorisation without Visa/Passport information on the purchaser, how are required information fields for Commonwealth Reporting to be completed?

You will need to request the relevant information about the purchaser (not the Attorney).

When does a corporation hold property?

A corporation holds property (including a security of a corporation) if the corporation:

  • is registered as the holder
  • is beneficially entitled to the property; or
  • controls the exercise of rights attached to the property.

Contact Us