The annual vacancy fee is part of the Australian Government’s plan to address housing shortages. The plan is intended to encourage foreign owners of residential real estate to make their properties available for rent where they are not occupied, and so increase the number of properties available for Australians in which to live.
Note the vacancy fee is different to the Victorian State Government’s vacant residential land tax and the absent owner surcharge.
The vacancy fee applies to foreign person who make a foreign investment application for residential property from 9 May 2017 and to foreign person who are purchasing in a development that has a New Dwelling Exemption Certificate which was applied for after 9 May 2017.
When Is My Property Considered Vacant?
The annual vacancy fee is levied on foreign owners of residential real estate where the property is not occupied or genuinely available on the rental market for at least six months in a 12-month period. There are some exceptions.
For the purpose of the vacancy fee, your residential real estate is considered residentially occupied if for at least 6 months (equivalent to 183 days) in a 12-month period (vacancy year), you can prove that:
- You or your relative genuinely occupied the property as a residence; or
- Your property was genuinely occupied as a residence subject to lease or licence (with minimum durations of 30 days terms); or
- The property was made genuinely available as a residence on the rental market (with minimum durations of 30 days terms).
Properties made available for short-term leases of less than 30 days such as AirBNB are not considered residentially occupied and would be liable for an annual vacancy fee.
What Do You Need to Do?
If you are affected by the fee, you must lodge an annual vacancy fee return with the Australian Taxation Office (ATO) within 30 days after the end of each vacancy year. A vacancy year is every 12-month period commencing when the foreign person acquired the right to occupy the property (for example, the date of settlement or receipt of an occupancy certificate).
This means that if the property is settled on 8 August 2017, it will need to be occupied or genuinely available for six months or more from that date to 8 August 2018. You will need to lodge the vacancy fee return within 30 days from 8 August 2018.
The ATO may issue an infringement notice if you fail to keep the required records for the timeframe specified (5 years) or fail to lodge a vacancy fee return by the due date. Further, a failure to submit the vacancy fee return will result in a deemed vacancy for that dwelling in the 12-month period (vacancy year). These measures are designed to encourage compliance with the vacancy fee regime.
How We Can Assist?
We can assist you complete and lodge the annual fee return and we can advise you on your liabilities and rights.
Please call our property team on 9614 7111 should you require any assistance with this or any other property-related matter.