VIC government hides foreign property buyer tax windfall

Via Domainfax:

Foreign purchasers are buying as much as 40 per cent of all new apartments in Melbourne, with new figures showing a surge in a tax raised from offshore investment.

Official data, released to The Age under freedom of information legislation, reveals that a tax on foreign buyers of residential property, introduced in mid-2015, has become a significant money-spinner for the Andrews government, with revenue almost  doubling in a year.

However, while the tax now generates substantial revenue of more than $133 million, it is not specifically itemised in state budget papers.

Property industry insiders and analysts believe this is because of the political sensitivity around foreign ownership and declining housing affordability.

The figures come as a separate analysis by leading property advisory firm Charter Keck Cramer found about four out of 10 of Melbourne’s new apartment purchases are to offshore buyers.

Truth is the first casualty of the population ponzi, even when there is nothing wrong with foreign purchases of off the plan apartments. Tax ’em high and hard!

It’s foreign purchases of existing dwellings that are the main problem which is why they elect to hide the lot.

Comments

  1. Mr SquiggleMEMBER

    So, is there some reverse maths that can be done to derive a figure on the total foreign $ invested?

    I don’t know what the tax rate is, but something like $133m = tax rate (?) times total $s spent by foreigners on new property?

  2. Most Mainland Chinese buyers like to leave the property untennanted, too, so it stays in a “new” condition. Also the 3% return of rent is dwarfed by the 20% capital gain.

    • Until it isn’t: with the AUD artificially high and new taxes biting, the current prices are the highest you will see from an overseas buyers’ perspective. If you are buying in RMB there is no upside left. Good time to sell.

      • SupernovaMEMBER

        Agree A2, esp. should the ALP sign an agreement with the Chinese Govt to agree to extradite these money laundering citizens; in return of course for continuation of financial political support.

      • Agreed Arrow
        When the market starts to crater here …. the AUD will follow. Double trouble for foreign speculators.

        What gets me is that the AUD and Yuan will be highly correlated, so why invest here if that’s the case? Oh well, those chumps will find out the hard way.

    • ” there is nothing wrong with foreign purchases of off the plan apartments”

      There is when you can’t house your own population adequately and can’t build at a pace fast enough to do so. Unless these are being rented to the local population – which seems unlikely given declining vacancy rates.

    • I am bewildered why other old hand commentators on this blog have not referred to the significant changes in conveyancing that are now subject in NSW and VIC – these being the identification of foreigners and foreign persons as beneficiary in discretionary and corporate Trusts as part of the reporting requirement to NSW and VIC government to capture their foreigner taxes.

      Those who are well read will understand that the China Government can seize all family assets domestically and in foreign countries if they identify that the China national in question has invested in foreign real estate. This China government policy intends to reduce capital outflow by these means and reduce the risk and expenditure by the CHina government to ‘manage’ these outflows.

      Any Australian who thinks the party has NOT come to a sizzling end is delusional in the least. HAVE A LOOK AT BITCOIN people – where is the China speculation happening? Go figure…….

      • Lol where do you get your news/propaganda from? CNN? VOA? The Chinese government is already very successful in stemming outflows (just google the figures), but there remains plenty of legit channels to funnel fund out of China. The major flows are still commercial and those have been severely restricted.

        As far as foreign RE acquisition goes, the real killer is immigration restrictions and foreign buyers tax. Both of tightening but not to the point that it will affect the status quo for a while yet.

      • @Joe you seemed to have missed the raison d’être. The fact the China national or foreigner is identified is the deterrent. Thirty years of lax government regulation has supported the flourishing of anonymity through fake identity and Trust cloaks in the form of corporate boards.

        Take some time to research the China and Vietnamese culture of fakery and translate this to the new process only in place from 1 July 2017 after 30+ years of regulatory ignorance turning a blind eye. Put yourself in the shoes of a China national who faces the loss of ALL family assets and property if IDENTIFIED – we now identify them again and place them in an electronic database similar to the process one goes through to obtain an Australian passport.

        Information n sharing anyone?

      • Tea Merchant,

        And now that the Land Titles Offices have been privatised access to that information to interested parties is likely to be even easier – provided you are prepared to pay.

        Gladys in NSW has gone to great lengths to ensure that Revenue NSW conceals the details of the number of transactions involving foreign buyers (offshore, temporary resident or permanent resident) or the amount of revenue raised from them.

        https://theglass-pyramid.com/2017/04/29/nswosr-watch-gladys-keeps-foreign-buyer-data-top-secret/

        The question is whether the new owners of the LTO would be prepared to provide, at a price, the Chinese Government with the details of property purchases where the purchaser or seller was recorded as a Chinese National. (either offshore, temporary resident or permanent resident in Australia).

        That would only catch transactions since 1 July 2016 in NSW but that would be an excellent starting point.

        Of course if the new owners of the LTO decided to start fixing the historical database i.e. fill in all the gaps, by sending registered owners a questionnaire regarding their status that might accelerate the process.

        Beijing might very very interested in a complete list of property ownership in Australia by its citizens.

        They may even pay a lot for the info.

        Innovation!

  3. “However, while the tax now generates substantial revenue of more than $133 million, it is not specifically itemised in state budget papers.”
    So once more Australian politicians conspire against the interests of the local citizens and try to hide the truth.
    Its called treason. Bunch of wankers.

    • Hey, but wait!

      it can’t be as we chased out all those “dual citizens” whom were working against the interest of the residents!

      • Bingo!

        Replacing Canada-born and NZ-born politicians with AUS-born politicians who are funded by China is a fantastic move! Canada and NZ are such evil influences on AUS!

  4. ceteris paribusMEMBER

    Australian housing is a great export industry. Apart from shorter-term fluctuations, its potential remains staggering, especially in pockets of Melbourne and Sydney

  5. SchillersMEMBER

    Not much point in encouraging off the plan apartments if they are allowed to be left untenanted, whether bought by locals or foreigners. Contrasts are apt with Paris, where a tax of 60% of the rental value is now levied annually on homes left unoccupied. Kinda focuses the mind on finding a tenant. Another problem is with Air’b’nB. Again, how does allowing overnight/weekend stays alleviate the shortage of housing for families who need well located places to live, long term. Governments need to get a lot smarter and harder with what is acceptable and what is allowable. We need to get our priorities right. Just letting landlords and the “market” rip has been an unmitigated disaster.

    • Great comment….unless we do so our political leaders will keep getting thrown out with the trash as one term wonders.

      The problem lies in that we have not a broad based policy feedback loops in operation since Gillard, even then it was infantile and required another decade of input to come to a sensible social platform. In laymans terms Australia has not had effective social policy in 35 years of neoliberalism. Turning the un-measurable into transaction based efficiency policies is the disaster.

      We need meaningful input, debate and consensus and that requires government that listens not dictates…..until this happens watch the highflyers get taken out with the king tide this business cycle.

    • I was astounded at the amount of properties on AirBnB here in Perth. Just had a look out of interest one day and couldn’t believe my eyes. Even have the house across the road from me on it. It will be reined in when they feel like it will be beneficial to whoever is stuffing the brown bag that month.

  6. SchillersMEMBER

    Allowing 50% capital gains tax deductions on the sale of IPs left vacant or Airbnbeed is another rort. Whether it’s a new or established property, I couldn’t give a rats. If it’s not available for genuine long term rental then NO TAX DISCOUNTS. The tax breaks needs to stop. How many more $ does the taxpayer have to give up to fund landlords lifestyles? It’s billions of dollars each year, ffs.
    I’m over it and over them. They need to take a long walk off a short pier.

  7. Is this a tax on all foreigners or just the ones residing outside AUS?

    There should be a massive land tax on all foreign owned houses in AUS (perhaps excluding apartments with elevators).

    • SupernovaMEMBER

      I think from 1st July the NSW Govt has increased the foreign purchase surcharge from 4% to 8% PLUS hiking annual land tax from 0.75% to 2% to all foreign owners of NSW RE. But importantly from the 1st July 2017, when selling any RE after exchange of titles to be able to settle on any RE you need an “ATO Clearance Certificate” from you guessed it….the ATO. Now apparently, if you don’t have this important “Clearance Certificate” at settlement a significant withholding tax will be given to the ATO; so if your property sells for 1,000,000 (million) a withhold tax of $125,000 will be withheld at settlement and sent to the ATO.

      • So is the 2% land tax on foreign nationals that reside in AUS? Or just the foreigners that reside outside AUS?

        And who checks what passport the landlord has?

      • mild colonialMEMBER

        A lot of sellers could be motivated to sell at just under 750 000. No need for auctions then.