Late last year, a Sydney family was subject to an uncompromising land tax rule and assessment by Revenue NSW, resulting in an unexpected $116,000 bill. The issue arose because one individual in the family, a permanent resident originally from Scotland, left Australia for just under 9 months to care for her ailing family member. This put her marginally over the threshold of time allowed outside Australia to qualify for exemption from the foreign investor land tax surcharge. Under current NSW law, permanent residents are only exempt from the surcharge if they have been physically present in Australia for at least 200 consecutive days during the land tax year. That rule, introduced as part of broader foreign investment reforms, is under scrutiny for its strict and inflexible application. The property, a family home, was legally assessed as being foreign-held land under the state’s surcharge regime. The surcharge sits at 8% of the property’s unimproved land value, which is compounded annually. Despite applying for relief on the basis of “exceptional circumstances,” their application was rejected. While the intent behind the foreign surcharge regime is to discourage speculative international ownership, this case suggests a need to reassess whether the rules are being applied with proportionality and fairness. Revenue NSW has not yet commented publicly on the matter.
Land Tax Law and Time Abroad
