A Victorian foreign purchaser who bought a property in her own name with funding provided by her Australian spouse was unsuccessful in a VCAT request for exemption from foreign purchaser stamp duty surcharge in Sim v Commissioner of State Revenue [2025] VCAT 349.

Background

In 2019, Ms Sim, settled the purchase of a property in Alphington, which she bought from a property developer.

The property was transferred into her name as the sole registered proprietor.

At the time of the transfer she was a South Korean citizen and in Australia on a Partner (Temporary) (class UK) (subclass 820) visa sponsored by Mr Sam, her spouse.

Mr Sam funded most of the deposit and cash purchase price. The remainder of the purchase price was funded by a loan to the couple jointly.

Duty was paid on the purchase of the property at the standard general rates of stamp duty. However, after an investigation, the Commissioner reassessed the transfer and imposed foreign purchaser additional duty at the rate of 7% (payable on the purchase price).

Legislation

Victoria imposes an 8% surcharge rate of stamp duty on the purchase of residential property by foreign purchasers (i.e. bringing the top rate of stamp duty to 14.5%). Individuals are treated as foreign if they are not Australian citizens or permanent residents for immigration purposes.

Section 28A of the Duties Act 2000 (Vic) provides for “foreign purchaser additional duty” to be charged on the transfer of residential land to a foreign purchaser. This is now 8%, but at the relevant time was 7%.

Section 69AJ of the Duties Act provides an exemption from foreign purchaser additional duty for the transfer of residential property to a foreign purchaser, if:

the foreign purchaser is a foreign natural person and the spouse or domestic partner of an Australian citizen or permanent resident;
the residential property is “transferred jointly” to the foreign purchaser and their spouse or domestic partner; and
the foreign purchaser occupies the property as their principal place of residence for at least 12 months commencing within 12 months of taking possession.

Issues and Decision

At VCAT, Ms Sim sought to rely on the section 69AJ exemption. The only requirement in contention was whether the property was transferred to Ms Sim and Mr Sam jointly.

While the fee simple estate in the property was transferred to Ms Sim as sole proprietor, the taxpayer contended that Mr Sam had received an equitable interest in the property under a purchase price resulting trust. This was argued to mean that the property had been transferred to them jointly.

However, VCAT held that Mr Sam was not a transferee jointly with Ms Sim as there no joint transfer of the freehold estate in the property. VCAT took the position that as duty applied to the freehold transfer of property, it was the freehold interest that was relevant.

As the property was not transferred to Mr Sam jointly with Ms Sim – the foreign purchaser additional duty applied.

Key Observations

It is important to consider carefully the stamp duty position when identifying the purchaser of property.

Foreign nationals acquiring property in Victoria need to pay particular attention to the foreign purchaser additional duty position.

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Please contact us with assistance with foreign stamp duty or land tax surcharges or any other State Tax issues.

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au

Nicholas Clifton
Principal Lawyer
T +61 3 9611 0154 | M +61 401 150 955
E nclifton@sladen.com.au

Meera Pillai
Associate
T +61 3 9611 0179
E mpillai@sladen.com.au