The 2017-18 South Australian State Budget, handed down on 22 June 2017, contained a number of changes that have implications for persons acquiring property in South Australia.
Relevant changes are summarised as follows:
| Measure | Commencement Date |
|---|---|
| The off-the-plan stamp duty concession will be extended until 30 June 2018 but will be retargeted so that it no longer applies to foreign purchasers | 22 June 2017 |
| A $10,000 grant will be provided to eligible off-the-plan apartment purchases where the contract is entered into between 22 June 2017 and 30 September 2017 | 22 June 2017 |
| A five-year land tax exemption will apply to eligible apartments bought off-the-plan where the contract is entered into between 22 June 2017 and 30 June 2018 | Midnight 30 June 2017 |
| A stamp duty surcharge of 4% will apply to foreign purchasers of South Australian residential property | 1 January 2018 |
Off-the-plan Stamp Duty Concession
The off-the-plan stamp duty concession has been extended for a further 12 months to 30 June 2018. However, foreign persons who enter into a contract on or after 22 June 2017 are no longer eligible for the concession.
The off-the-plan stamp duty concession was introduced in 2012 and currently provides a partial stamp duty concession on a transfer of new or substantially refurbished apartments located anywhere in South Australia pursuant to contracts entered into between 1 July 2014 and 30 June 2018. The concession applies to anyone, regardless of whether they are a first home owner, and is available in addition to the first homeowners grant.
Pre-construction Grant
In addition to the off-the-plan stamp duty concession, purchasers who entered into an eligible off-the-plan apartment contract between 22 June 2017 and 30 September 2017 may be eligible to receive a $10,000 grant, provided the contract was entered into before construction of the apartment complex commences. This grant is not available to foreign purchasers.
Five Year Land Tax Exemption for Eligible Apartments Bought Off-the-plan
A land tax exemption has been introduced for apartments that are purchased off-the-plan where the contract for purchase is entered into between 22 June 2017 and 30 June 2018. The exemption applies for the first five financial years after purchase but will cease to apply if the apartment is sold before the end of this period. The exemption does not apply to foreign purchasers.
The eligibility criteria for the exemption are the same as those that apply to the off-the-plan stamp duty concession.
Stamp Duty Surcharge for Foreign Purchasers of South Australian Residential Property
One of the most significant announcements in the 2017/18 South Australian State Budget was the introduction of a surcharge on stamp duty for foreign purchasers. Following in the footsteps of the eastern states, dutiable instruments entered into on or after 1 January 2018 pursuant to which a foreign purchaser acquires residential property, or an interest in residential property, in South Australia will be charged with a 4% surcharge in addition to the duty that is otherwise payable on the instrument. The amount of the surcharge is 4% of the value of the interest acquired by the foreign person. The surcharge applies to both acquisitions of direct interests as well as acquisitions of indirect interests (through the landholder provisions), however does not apply if the acquisition is otherwise exempt from duty.
Foreign person includes individuals, corporations and trustees of foreign trusts. A foreign natural person is any individual who is not an Australian citizen, Australian permanent resident or New Zealand citizen who holds a special category visa.
A corporation will be foreign where it is incorporated outside Australia or where foreign persons, companies or trusts hold, or hold between them, 50% or more of the shares in the corporation 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.
A trust will be a foreign trust where, if the trust is a fixed trust, one or more foreign persons hold 50% or more of the beneficial interests in the capital of the trust, or if the trust is a discretionary trust, any of the trustees, a person who has the power to appoint under the trust, an identified object under the trust or a person who takes capital of the trust property in default is a foreign person. While not clear from the draft legislation, in practice, it is expected that “a person who has the power to appoint under the trust” will be limited to persons who have the power to appoint a new trustee of the trust, and that an identified object under the trust will be limited to persons specifically named in the trust deed.
The provisions only apply to residential land. The definition of residential land includes not only land being used for residential purposes, but can also include land that has improvements of a residential character, even if not being used for residential purposes at the relevant time, and even vacant land if the land is zoned for a residential purpose.
A refund of the surcharge will be available where the foreign person or trust ceases to be a foreign person or trust as defined within 12 months after acquiring the interest in the residential property, provided they still hold the interest in the property at the time that they cease to be a foreign person or foreign trust.
Conversely, the surcharge will be retrospectively imposed where a person or trust becomes a foreign person or trust within three years of the acquisition of the interest in the residential property, provided the person or trust still holds the interest in the property at that time.
