Foreign Investor Duty Surcharge Tasmania: Rates, Who It Applies To, and the FILTS

If you are a foreign person or entity considering residential property investment in Tasmania, you face two separate surcharges that apply independently of each other. One is paid at settlement. The other is charged every year for as long as you hold the property. Together, they represent a substantial increase in both the upfront acquisition cost and the ongoing holding cost relative to what an Australian resident investor pays.

Understanding exactly how these surcharges work — and who counts as a "foreign person" for the purposes of the legislation — is essential before any commitment is made.

The Foreign Investor Duty Surcharge (FIDS)

FIDS is an additional transfer duty imposed on top of the standard progressive duty schedule. It was introduced for agreements entered into on or after 1 April 2020.

The rate is:

• 8.0% of the purchase price for residential property
• 1.5% of the purchase price for primary production property

FIDS is calculated on the entire purchase price (or open market value, whichever is greater) — it is not a progressive rate applied only to the foreign person's share. If you acquire 100% of a residential property as a foreign person, the surcharge applies to 100% of the purchase price at 8.0%.

Worked example: $500,000 residential property

A foreign investor purchases a $500,000 house in Hobart.

Standard progressive transfer duty: The purchase price falls in the $375,001–$725,000 bracket.

• Base duty: $12,935
• Excess: $125,000 × 4.25% = $5,312.50
• Standard duty: $18,247.50

FIDS:

• $500,000 × 8.0% = $40,000

Total transfer duty payable: $58,247.50 This represents an effective upfront tax rate of 11.65% of the purchase price.

An Australian resident investor buying the same property pays $18,247.50 — an effective rate of 3.65%. The FIDS adds a further $40,000 to the acquisition cost that must be funded from cash before or at settlement.

Who Counts as a "Foreign Person"?

The FIDS applies to:

• Foreign natural persons — individuals who are not Australian citizens, permanent residents, or New Zealand citizens holding a Special Category visa
• Foreign corporations — companies incorporated outside Australia, or Australian companies in which foreign persons hold substantial interests (generally defined as 20% or more individually, or 40% or more collectively)
• Trustees of discretionary trusts that have significant foreign beneficial interest — if the trust deed allows foreign beneficiaries to benefit, and at least one foreign person holds more than a specified threshold, the trust may be treated as foreign

This last category catches a significant number of structures that investors might not initially consider to be "foreign." An Australian-registered trust or company with foreign parent ownership can be caught. If you are using a corporate or trust structure that involves any non-resident ownership, you need a specific determination from a tax lawyer or conveyancer before assuming the surcharge does not apply.

The definition aligns substantially with Commonwealth foreign investment review rules, but there are state-level nuances. Do not rely on a general FIRB determination to conclude that FIDS does not apply.

The Foreign Investor Land Tax Surcharge (FILTS)

FILTS is the annual holding cost equivalent of FIDS. It was introduced under Part 2 of the Land Tax Act 2000 and applies to land classified as General Land that was acquired by a foreign person — or owned by a company or trust that becomes foreign — on or after 1 July 2022.

The rate is a flat 2.0% per year of the assessed land value of each residential property.

How FILTS differs from standard land tax

Standard land tax has a tax-free threshold of $125,000 assessed land value (2025–26 rates). FILTS has no floor exemption — it applies regardless of whether the assessed land value is below the standard threshold.

This means a foreign investor can hold a property with an assessed land value below $125,000 and pay zero standard land tax but still owe FILTS.

FILTS is also applied on a title-by-title basis, using each property's unique Volume and Folio numbers. This is distinct from standard land tax, which is aggregated across all properties under the same entity. The title-by-title assessment means FILTS applies to each individual property based on its own assessed land value, not the portfolio total.

Worked example: combined annual land tax for a foreign investor

Consider a foreign corporation holding two residential investment properties in Tasmania:

• Property A: assessed land value of $250,000
• Property B: assessed land value of $350,000
• Combined assessed land value: $600,000

Standard land tax (aggregated under Section 24): $600,000 falls in the $500,000+ bracket.

• $1,737.50 + (1.5% × $100,000) = $1,737.50 + $1,500 = $3,237.50

FILTS (applied per title):

• Property A: 2.0% × $250,000 = $5,000
• Property B: 2.0% × $350,000 = $7,000
• Total FILTS: $12,000

Total annual land tax liability: $15,237.50

An Australian resident investor holding the same two properties would pay only the $3,237.50 standard land tax — the FILTS adds a further $12,000 per year to the foreign investor's holding cost.

For a property generating $450–$560 per week in rent, an additional $12,000 in annual land tax is a substantial drag on net yield.

FIRB Approval and Additional Requirements

Foreign persons purchasing residential property in Australia are generally required to obtain Foreign Investment Review Board (FIRB) approval before completing the acquisition. FIRB approval is a Commonwealth requirement separate from the Tasmanian surcharges, but it is a precondition to the purchase — not just to the duty calculation.

Established residential properties (as opposed to new dwellings or vacant land) are subject to FIRB restrictions. Foreign persons generally cannot purchase established residential dwellings unless they hold a temporary visa and will use the property as their primary residence during their stay. This effectively limits most foreign investment in Tasmanian residential property to new builds, off-the-plan purchases, or commercial transactions.

If you are a foreign person and your proposed acquisition is an established dwelling for investment purposes, FIRB restrictions may prevent the purchase entirely, regardless of whether you are prepared to pay FIDS and FILTS. This is a fundamental legal question to resolve with an Australian immigration and property lawyer before proceeding.

Key Points

• FIDS is an additional transfer duty of 8.0% of the purchase price for residential property, applied to foreign persons on top of the standard progressive duty schedule.
• On a $500,000 purchase, FIDS adds $40,000, increasing the total upfront duty from $18,247.50 to $58,247.50 — an effective rate of 11.65%.
• FILTS is an annual land tax surcharge of 2.0% of the assessed land value per title, with no floor exemption.
• For a two-property portfolio with a combined assessed land value of $600,000, FILTS adds $12,000 per year on top of standard land tax.
• The definition of "foreign person" extends to Australian trusts and companies with sufficient foreign beneficial ownership — professional advice is required to determine whether any given structure is caught.
• FIRB approval requirements may restrict foreign purchases of established residential dwellings for investment purposes entirely. This is a separate Commonwealth law issue from the state surcharges.

For investors modelling the full financial picture of a Tasmanian property investment as a foreign person — including FIDS at acquisition, FILTS annually, and how these interact with gross yield and net cash flow — the Tasmania Investment Property Guide includes worked scenarios specific to foreign investor structures.

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