Annual vacancy fee for foreign owners

Overview

In December 2017 the Australian Government introduced an annual vacancy fee for foreign owners of residential dwellings.

Under the legislation, foreign owners of residential dwellings in Australia are required to pay an annual vacancy fee if their dwelling is not residentially occupied or rented out for more than 183 days (six months) in a year.

If you’re a foreign owner of a residential dwelling you may be liable to pay the annual vacancy fee.

The annual vacancy fee is part of the Australian Government’s comprehensive housing affordability plan. It is intended as a financial incentive for foreign owners to make their dwelling available for rent and increase available housing in Australia.

Who needs to lodge a vacancy fee return

The vacancy fee return must be lodged by foreign owners of residential dwellings who:

• made a foreign investment application for residential property after 7.30pm AEST on 9 May 2017
• purchased under a New Dwelling Exemption Certificate that a developer applied for after 7:30pm AEST on 9 May 2017.

The vacancy fee may also apply where a foreign person failed to submit a foreign investment application but purchased a residential property before 9 May 2017.

Foreign owners of vacant land do not have to lodge a vacancy fee return.

You must lodge a return even where the dwelling has been occupied or made available for rent.

If the dwelling is owned by two or more people as joint tenants, you only need to lodge one return.  However, if you own a share of a dwelling as a tenant in common, you each must lodge a vacancy fee return.

If any of the following occur, a vacancy fee return will not be required to be lodged:

• the dwelling is sold or otherwise legally transferred (including in the event of the death of the owner)
• you cease to be a foreign person

Source: Australian Taxation Office