Government passes 7 per cent foreign buyer tax

Stock image.
Stock image.

FOREIGN buyers of WA residential property will pay a 7 per cent surcharge from January 1, 2019 after legislation passed through the Legislative Council yesterday. (October 9)

The government expects the surcharge to raise about $120 million over the next four years.

Finance minister Ben Wyatt said it was the right result for the state to have foreign buyers contribute to the infrastructure from which they benefit and to budget repair.

WA is now in line with other Australian states, all of which have introduced a foreign buyer surcharge.

The property industry has previously expressed its opposition to the surcharge and, following the passing of the legislation, the Urban Development Institute of Australia WA is asking the government to delay its introduction until the property market has recovered from the current downturn.

“The WA property market is in the very early stages of recovery and, given foreign investment in the property market is integral to the success of the market and the wider WA economy, we have strongly urged the government to reconsider the imposition of a tax that directly detracts from investment in WA property,” chief executive Allison Hailes said.

“Despite our best efforts, the government has progressed to pass the legislation and we now implore them to defer the introduction of the surcharge until the WA property market improves.

“Given surcharges such as the one proposed are generally used to dampen ‘hot markets’ we are extremely concerned that any new tax or charge, will have a detrimental impact on the potential market recovery in WA.”

REIWA president Damian Collins was also disappointed members of the WA parliament ignored the concerns of the property industry and voted to pass the surcharge.

“The WA property market has endured a challenging few years,” he said.

“We are just starting to see the green shoots of a recovery on the horizon, a new tax will only serve to further dampen our already weak market and deter much needed foreign investment from the state.

“Although foreign buyers only make up a small proportion of the WA market, it’s a proportion we can’t afford to lose, especially at a time when the market is showing signs of stabilising.”

More: Surcharge to affect more than just foreign buyers: REIWA