Bonus Article, Annual vacancy fee for foreign owners

At the end of 2017, an annual fee was introduced for dwellings owned by non-residents of Australia. The measure is part of the government’s housing affordability plan, and is also a financial incentive for foreign owners to make their dwelling available for rent and increase available housing in Australia.

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.

The “vacancy year” is not a calendar or financial year, but starts from when the owner first held their interest in the dwelling. The fee is paid by lodging a “vacancy fee return” with the ATO, which is required within 30 days after the end of the vacancy year.

Foreign owners of vacant land do not have to lodge a vacancy fee return until a dwelling has been constructed on the land. If the dwelling is owned by two or more people as joint tenants, only one return is required, but if ownership is shared as tenants in common, each should lodge a vacancy fee return.

If during the year the dwelling is sold or otherwise legally transferred (including in the event of the death of the owner), or the owner ceases to be a foreign person, a vacancy fee return will not be required to be lodged.

If an owner can show that for at least 183 days in a vacancy year, the dwelling was incapable of being occupied as a residence, they will not be liable to pay the vacancy fee. However to claim this exemption, a vacancy fee return will need to be lodged with the ATO.

The amount of the fee is generally the same as the foreign owner will have paid when making a foreign investment application for residential property with the Foreign Investment Review Board.

Further information is available by contacting the ATO’s foreign investment inquiry line on 1800 050 377 (within Australia) or +61 2 6216 1111 (from overseas).