Foreign Purchaser Additional Duty and changes to the criteria for New Zealand citizens

In Victoria, foreign purchaser additional duty (‘FPAD’) can apply to residential property acquisitions¹ where the purchaser is a ‘foreign natural person’ as defined under the Duties Act 2000 (Vic) (‘Duties Act’).

On 25 November 2025, the State Taxation Further Amendment Act 2025 (Vic) (‘Amendment Act’) was enacted. Among other changes, the Amendment Act amends the FPAD rules and definition of a ‘foreign natural person’ in the Duties Act to clarify how FPAD will apply to New Zealand citizens (who are not also Australian citizens or permanent residents).

The FPAD changes commence from 26 November 2025 and there is no transition or lead in time.

Prior to 26 November 2025, individuals who were:

• a New Zealand citizen holding a Special Category Visa (Subclass 444); and
• not an Australian citizen or a permanent Australian resident,

were not liable to pay FPAD (‘Subclass 444 Requirement’) on a dutiable transaction of ‘residential property’ (as defined in section 3G of the Duties Act).

To hold a Special Category Visa (Subclass 444), the New Zealand citizen must be physically present in Australia. Accordingly, this had the practical effect that if the visa holder was not present in Australia on the date of the dutiable transaction or acquisition - typically the date of settlement - they were treated as a foreign purchaser liable to pay FPAD.

From 26 November 2025, the Subclass 444 Requirement no longer applies and has been replaced with a new residency requirement. In particular, under section 3K of the Duties Act, a New Zealand citizen will not be treated as a ‘foreign natural person’ and therefore not liable for FPAD, if the person ordinarily resides in Australia for a continuous period of at least 6 months within a period commencing 12 months before and ending 12 months after the date of the dutiable transaction or relevant acquisition (the ‘Residency Requirement’).

The amendments to the Duties Act also deal with the situation where a New Zealand citizen’s living circumstances change. For example, they purchase a residential property on the expectation that they can comply with the Residency Requirement. But for work or other reasons, they must move back to New Zealand and can no longer comply.

In this scenario:

• section 3M of the Duties Act provides that a New Zealand citizen must lodge a written notice to the SRO Commissioner within 30 days after that person becoming aware of any circumstances that may result in non-compliance with the Residency Requirement; and
• the New Zealand citizen will be deemed a foreign purchaser under section 3L of the Duties Act. In addition, the SRO has the power to reassess the applicable duty, and FPAD can apply to the relevant transaction.

However, under section 3K(3) of the Duties Act, the SRO Commissioner has a discretion to either reduce the duration of the residency period, or extend the time to complete the residency period, if satisfied that there is ‘good reason’ that the person cannot satisfy the Residency Requirement.

Solicitors acting for New Zealand citizens (who are not also Australian citizens or permanent residents) purchasing or acquiring an interest in residential property, should assess whether the relevant transaction may be subject to FPAD. If FPAD potentially applies, solicitors should provide clear written advice to the client:

• about the specific elements required to satisfy the Residency Requirement (and therefore, whether FPAD applies),
• if they become aware of any circumstances that may result in non-compliance with the Residency Requirement, that the client must notify the SRO Commissioner in writing within 30 days after becoming aware of those circumstances, and the transaction may be subject to FPAD,
• that the SRO also conducts compliance audits after transactions have occurred. Accordingly, if the client has not complied with the Residency Requirement, the SRO will likely issue a notice of assessment of FPAD, penalties and interest.

Solicitors should also obtain an acknowledgement from the client that they understand the Residency Requirement before completing the duties online form in accordance with the client’s instructions.

1. FPAD can apply to a broad range of residential property acquisitions, both direct and indirect (such as acquisition of shares or units in a landowning entity that owns residential property), which is not discussed in this article. For the purpose of this article, the focus is whether a New Zealand citizen is a ‘foreign natural purchaser’ under the Duties Act, and whether FPAD may apply.