Foreign Investment Property Owners – Beware of the new tax!

The Bill has passed and received Royal Assent on 30 November 2017 for the Commissioner of Taxation to charge a vacancy fee to foreign residents owning an investment property in Australia that is not occupied.   This has been popularly called a “ghost tax”.

The fee only applies to non-Australian tax residents who own a residential property that was “vacant” for more than 183 days in a financial year.

A residential property is “occupied” (ie not “vacant”) when:

(a)  the owner or his/her relatives genuinely lives in the property,

(b)  the property is under a lease or licence for a minimum of 30 days, or

(c)  the property is genuinely available for lease or licence for a minimum of 30 days.

If the property is classed as “vacant” (ie not “occupied”), then the owner of the property will need to file a “Vacancy fee return” to the Commissioner of Taxation and pay the vacancy tax.

Are you a US Citizen in Australia?

The USA is one of very few countries who tax their citizens on their world-wide income no matter where they are living overseas. This means that US citizens who live in Australia are required to also lodge US tax returns with the Inland Revenue Service. If you are a US citizen, living in Australia, it is important to let your Australian accountant know as soon as possible as there can be unforeseen consequences from your Australian business activities if caught up under the USA IRS’s expansive rules and regulations.

Photo Courtesy of Wikimedia Commons: By James Montgomery Flagg ( [Public domain]