NSW Surcharge Purchaser Duty – A Timely Reminder on Foreign Status Disclosure
Purchasers of residential-related property in New South Wales must exercise caution when declaring their foreign status.
A recent decision by the NSW Civil and Administrative Tribunal on 4 August 2025 highlights the serious consequences of incorrect disclosure.
Case Spotlight: Phan v Chief Commissioner of State Revenue [2025] NSWCATAD 193
In this case, the purchaser incorrectly declared that they were not a foreign person. The Tribunal upheld the Chief Commissioner’s assessment of Surcharge Purchaser Duty.
The purchaser was a citizen of Vietnam, who at the time of entering into the contract was in Australia on a Student visa. The purchaser as the holder of a temporary visa at the relevant time, was not ‘ordinarily resident’ in Australia, thus making her a ‘foreign person’ liable to Surcharge Purchase Duty. The purchaser completed a Purchaser Declaration in respect of the transaction and declared she was a foreign person, which was correct. However, incorrectly claimed, that she was an exempt permanent resident who will occupy the property as their principal place of residence for a continuous period of 200 days within the first 12 months.
As a result, the purchaser was liable for:
- Surcharge Purchaser Duty at 8% of the property’s dutiable value – this was $104,000
- Penalty interest and charges, including retrospective interest and administrative penalties under the Taxation Administration Act 1996 (NSW) – the penalty tax was $20,800 plus interest of $20,432.12,
The purchaser’s solicitor warned her twice, in writing, that the primary transfer duty was $55,720 plus Surcharge Purchaser Duty of $104,000.
The purchaser declaration was given by her solicitors to a stamping agent for processing and was on the first occasion questioned the agent’s duty calculation of $55,720.00, noting that the purchaser ‘is a foreign national’. The matter wasn’t queried any further and the purchaser paid the calculated amount of $55,720.00.
The tribunal identified that it was difficult to understand why the solicitors didn’t look more deeply into the discrepancy between the position they had reached on researching the purchaser’s circumstances, and the position reached by the stamping agent.
This decision reinforces the importance of accurate declarations.
What Is Surcharge Purchaser Duty?
Introduced on 21 June 2016, Surcharge Purchaser Duty applies to acquisitions of residential-related property by individuals, corporations, or trustees deemed to be foreign persons under NSW law. While Australian citizens and ordinarily resident individuals are generally exempt, discretionary trusts pose a unique risk. If the trust deed does not explicitly exclude foreign beneficiaries, the trust may be deemed foreign—regardless of the citizenship of the trustee or beneficiaries.
How to Protect Yourself
To avoid unexpected liabilities:
- Confirm the purchasing entity before exchanging contracts.
- Review trust deeds with a solicitor to ensure foreign beneficiaries are excluded.
- Accurately complete the Revenue NSW Purchaser Declaration.
- Do not rely solely on agents or conveyancers to identify surcharge risks.
What you should do
The Phan decision serves as a cautionary tale for property purchasers and advisors alike. If you are considering a property acquisition and have questions about foreign person status, our property law team can assist with pre-purchase reviews and trust deed amendments to ensure compliance.
Contact Peter McNamara to ensure you get it right.
You can read the case here: Phan v Chief Commissioner of State Revenue [2025] NSWCATAD 193