Aussies stamp on Kiwis again

‘‘Hey now, hey now. Don’t dream it’s over’’. The lyrics say it all when it comes to our trans-Tasman relationship with the neighbours.

In the latest edition of the dream being over for New Zealanders, those wanting to buy a holiday home in Australia better brace themselves for a financial backstab with a double layer of stamp-duty that’s crept in.

This can add tens of thousands of dollars to transaction costs. As

an example, an A$800,000 ($834,398) house in New South Wales attracts stamp duty of A$31,719, but if you still reside in New Zealand and don’t pass the 200-day test, the duty becomes A$95,719.

In Queensland, an A$800,000 house incurs $24,466 of stamp duty for a local buyer, but blows out to A$80,466 for New Zealanders who remain resident at home.

It’s another example of Kiwis being treated as ‘‘foreigners’’, while our own property market treats Aussies as locals.

As New Zealand citizens, we can buy a home in Australia and don’t require permission from their Foreign Investment Review Board. The same etiquette is extended to Australians who are not restricted by our Overseas Investment Act.

Each state in Australia imposes a different stamp duty regime (except the Northern Territory). We don’t have an equivalent tax, so there’s no tit-for-tat when they buy our houses. No gripes with that, it’s unavoidable.

Yet here’s the sting. The introduction of Additional Foreign Acquirer Duty. This is a second layer of stamp duty for ‘‘foreigners’’. There’s an exemption for Kiwis who hold a special category visa (known as subclass 444).

We are all entitled to this visa so many New Zealanders believe if they jump on a flight to Oz, get the visa and sign the house contract, all is swell.

Well it’s not. In NSW you need to live in Australia for 200 days to avoid the foreign stamp duty surcharge. You can live there prior to the house purchase or complete the 200 days in the first year of ownership.

In Queensland, things are similar. If they believe you entered Australia to get the visa and avoid

this additional duty, they’ll deem you liable for it.

You should expect your movements to be checked with border control.

Two of the most popular destinations, NSW and Queensland, view us as foreigners and more states could follow suit. Yet Aussies are welcome to buy holiday homes anywhere in New Zealand and not reside here. We don’t let other ‘‘foreigners’’ do that.

Given the size of the tax it’s easy to see how some house sales are falling through, when Kiwis find out what they’re liable for.

The lesson is to reside in

Australia permanently, but that comes with warnings, too. If you’re over 65 years old and a teeny bit rich, they’ll swipe your superannuation. If an Australian makes the reverse move, we pay them super, even if they’re not eligible for the Australian Age Pension.

A clever retiree leaving New Zealand for a single stint of 200 days to avoid the surcharge might pull it off. The government stops your super if you go on holiday for more than 26 weeks and if you stay away for 30 weeks (210 days) you have to repay it from the date you left. That gives ten days to hot-foot

it home and avoid the big pensionpayback.

Neil Finn must have had a crystal ball when he sang: ‘‘There’s a battle ahead. Many battles are lost’’.

What can you do if you’re desperate to own a property in Australia or want to retire there and not lose your super?

1. Don’t buy in NSW or Queensland. Look at opportunities in other states of Australia where the special category visa doesn’t come with additional strings. You simply need to be in Australia when you complete and settle the contract.

2. Retirees; don’t live in your Australian home for more than 26 weeks a year to preserve your New Zealand Super and buy a home outside NSW and Queensland for stamp duty purposes.

3. Retirees; upsize rather than downsize your home when you move to Australia permanently. Currently the value of your home is not included when they means-test your assets to determine your New Zealand Super entitlement. Keep less than A$400,000 in other assets. Downsize when you run out of money. It’s fraught with risk

though, incurring up to 10 per cent in transaction costs, overexposure to the property market and your savings not being properly invested in shares and bonds.

4. Take legal and tax advice from a firm with trans-Tasman experience.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.

Neil Finn must have had a crystal ball when he sang: ‘‘There’s a battle ahead. Many battles are lost’’.