Foreign investors are generally restricted from purchasing established dwellings in Australia under the current foreign investment rules. But a property interest can change hands in ways other than an ordinary purchase. A recent Family Court matter illustrates why the legal pathway matters.
In that matter, a foreign client obtained title to an established residential property through a Family Court order. The result called for careful consideration of the foreign investment framework as well as Queensland duty issues, including additional foreign acquirer duty (AFAD).
Why the way title is obtained matters
The foreign investment rules focus on how an interest in land is acquired. A conventional agreement to buy an established home and a transfer made because of a court order are not necessarily treated in the same way.
The Foreign Investment Review Board’s guidance explains that where an interest is acquired because of a Family Court order under section 79 of the Family Law Act 1975, the acquisition may be treated as occurring by devolution by operation of law. That can be relevant to whether a foreign investment notification is required.
A court order is different from a consent order
This distinction is important. The outcome is not automatic simply because family law proceedings are involved.
FIRB’s guidance distinguishes a court-determined order from an arrangement that the parties have reached voluntarily and then formalised through consent orders. A consent order may retain that voluntary element, so the available exception may not apply in the same way. The facts, wording of the order and the steps leading to it all matter.
FIRB is only one part of the analysis
Even where the acquisition follows a Family Court order, the parties may still need advice on:
- whether the recipient is a foreign person for foreign investment purposes;
- any FIRB approval, notice or record-keeping requirements;
- Queensland transfer duty and AFAD; and
- the tax and practical consequences of implementing the property settlement.
The current restrictions on foreign investors acquiring established dwellings make it especially important to obtain advice before a property settlement is finalised. A Family Court process can change the analysis, but it does not remove the need to examine the detail.
Get advice early
If you are dealing with established residential property in family law proceedings and one party may be a foreign person, seek independent legal and tax advice before orders are made or settlement is implemented. Ensure Legal can assist Queensland clients to identify the property-law issues early and coordinate the steps required for the transaction.
Further reading: Foreign Investment Australia: Residential land and Guidance Note 2: Key concepts.
This article provides general information only. It is not legal or tax advice, and each matter depends on its own facts.
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