Foreign person land tax surcharge by state: 2026 rates for Australian trusts and companies

Foreign persons holding residential land via Australian trusts and companies face a surcharge land tax in most of the eastern states. The surcharge applies in addition to ordinary land tax and ranges from 0.75 per cent (ACT) to 5 per cent (New South Wales), with a separate one-off surcharge duty of up to 9 per cent applying at the time of acquisition. For trusts, the question is whether any person within the class of beneficiaries is a foreign person under the relevant state Act. Pre-2017 deeds typically fall short.

New South Wales applies a 5 per cent surcharge land tax on residential land owned by foreign persons, and a 9 per cent surcharge purchaser duty on acquisition (increased from 8 per cent on 1 January 2025). The definition of foreign person sits in section 104J of the Duties Act 1997 (NSW). A discretionary trust is treated as foreign unless the trust deed expressly and irrevocably excludes any foreign person from being capable of receiving a distribution. The deed must also exclude foreign trustees and foreign appointors in defined circumstances.

Victoria applies a 4 per cent absentee owner surcharge (its surcharge land tax) on taxable land (not only residential land) held by absentee owners, plus an 8 per cent foreign purchaser additional duty on acquisition. The definitions sit in the Land Tax Act 2005 and the Duties Act 2000 (Vic). Trusts holding Victorian residential land require a deed amendment under Victorian terms; the NSW exclusion language is not interchangeable with the Victorian language.

Queensland applies a 3 per cent land tax foreign surcharge on taxable land (not only residential land) held by foreign companies and trustees of foreign trusts, plus an 8 per cent additional foreign acquirer duty (AFAD) on acquisition (increased from 7 per cent on 1 July 2024). For duty, foreign person and foreign trust are defined in sections 234 and 237 of the Duties Act 2001 (Qld): a trust is foreign if at least 50% of the trust interests are foreign interests. The land tax foreign surcharge applies its own definitions under the Land Tax Act 2010 (Qld). Like NSW and Victoria, the deed amendment must be drafted under Queensland terms.

South Australia and Western Australia levy a 7 per cent foreign ownership surcharge on the transfer duty for residential acquisitions but do not impose a land tax surcharge. Tasmania applies an 8 per cent foreign investor duty surcharge on acquisition and a 2 per cent foreign investor land tax surcharge on general land acquired on or after 1 July 2022. The Australian Capital Territory levies a 0.75 per cent foreign ownership land tax surcharge on residential land but no duty surcharge; the Northern Territory imposes neither. Each state defines foreign person under its own legislation; cross-state comparisons matter when a trust holds land in multiple states.

Trusts that hold residential property in multiple states present a particular drafting challenge. A single deed amendment that covers only one state leaves the trust exposed in others. Best practice for advisers is to draft the deed amendment to reference each state definition in which the trust holds or intends to hold property, with irrevocable exclusion language tested against each Act.

Practical advice. Pre-2017 discretionary trust deeds almost certainly need amending if the trust holds, or will hold, residential land. Each state imposes its surcharge at the time of acquisition or on the next assessment cycle, so the amendment must be in place before the relevant trigger event. Once the surcharge has been levied, retrospective amendments do not unwind the liability. Contact us if you need a deed amendment drafted to cover specific states.