Foreign Investment, FIRB Approval, and Buyer Surcharges

Who counts as a foreign person under FATA 1975

The Foreign Acquisitions and Takeovers Act 1975 defines a 'foreign person' as an individual who is not an Australian citizen or permanent resident, a foreign corporation where one foreign person holds 20% or more (or multiple foreign persons hold 40% or more in aggregate), or a foreign government investor. New Zealand citizens and Australian permanent residents are not foreign persons for these rules.

FIRB application fees and approval process

Foreign persons generally require FIRB approval before acquiring any interest in residential land, regardless of value. Applications are made to the ATO under FATA 1975. Fees are tiered by property value: approximately $44,100 for properties under $1 million, $88,500 for properties between $1 million and $2 million, and six-figure amounts for higher-value acquisitions. Fees for investment-purpose residential property have been tripled compared with 2023 levels.

Foreign buyer stamp duty surcharges by state and territory

Every mainland state except the ACT imposes a foreign buyer stamp duty surcharge on residential property purchases, ranging from 7% to 9% on top of standard transfer duty. These surcharges are payable at settlement alongside the base duty.

Foreign owner land tax surcharges

Several states also impose ongoing annual land tax surcharges on foreign-owned residential or general land, creating a recurring holding cost separate from the one-off stamp duty surcharge.

Federal annual vacancy fee

The vacancy fee applies where a foreign person acquired residential property with FIRB approval (for approvals made after 9 May 2017) and the property is not residentially occupied or genuinely available for rent for more than 183 days in a vacancy year. 'Residentially occupied' includes occupation by the owner or relatives as a home, or genuine arms-length leases of at least 30 days. The fee is generally equal to the original FIRB application fee. Vacancy fee returns must be lodged with the ATO within 30 days of the end of each vacancy year.

CGT rules for foreign resident sellers

Foreign residents face three compounding disadvantages when selling Australian property. First, the main residence exemption has been removed for disposals after 30 June 2020 (rules backdated to 9 May 2017), meaning full CGT exposure on residential property for most foreign owners. Second, the 50% CGT discount is broadly unavailable for periods of foreign or temporary residency from 8 May 2012. Third, buyers must withhold 15% of the purchase price at settlement under the Foreign Resident CGT Withholding regime (from 1 January 2025, no value threshold), unless the vendor produces an ATO clearance certificate.

Non-resident income tax rates 2025-26

Non-residents pay income tax only on Australian-source income. There is no tax-free threshold. The rates are 30% on every dollar up to $135,000, 37% on $135,001 to $190,000, and 45% above $190,000. Non-residents do not benefit from resident tax cuts (Stage 3 or further reductions). Double Tax Agreements may allocate taxing rights differently where a treaty applies, particularly for business profits only taxable in the residence country unless a permanent establishment exists in Australia.

Worked example: foreign buyer purchasing a $900,000 apartment in Sydney

Wei, a Singapore-based investor, purchases a new apartment in Parramatta for $900,000 in 2025-26.

Statute references

• Foreign Acquisitions and Takeovers Act 1975 (FIRB framework, foreign person definition, vacancy fee Part 6A)
• Foreign Acquisitions and Takeovers Regulation 2015 (exemptions and thresholds)
• ITAA 1997 Division 855 (taxable Australian property, CGT for non-residents)
• Taxation Administration Act 1953, Schedule 1 Subdivision 14-D (foreign resident CGT withholding)
• State Duties Acts and Land Tax Acts (foreign buyer surcharges by jurisdiction)

Frequently asked questions