When a company or trust is a foreign person
Treasury's key concepts note sets out the federal test. A company is a foreign person if an individual who is not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest, which means at least 20%. It is also a foreign person if two or more of those holders have an aggregate interest of at least 40%. The trustee of a trust is tested the same way, using beneficial interests in the income or property of the trust. Interests are combined with those of associates and traced up through layers of ownership.
| Entity | Foreign person if |
|---|---|
| Company | One foreign owner holds 20% or more, or foreign owners together hold 40% or more |
| Fixed or unit trust | One foreign person holds a beneficial interest of 20% or more, or foreign persons together hold 40% or more |
| Discretionary trust | Each beneficiary the trustee can distribute to is treated as holding the maximum share the trustee could give them |
| General partner of a limited partnership | Foreign holders hold 20% or more of the partnership, or together 40% or more |
The discretionary trust rule is the one that surprises families. Treasury's examples include a family trust in which one of the named individuals recently married a foreign person. The spouse is treated as holding the maximum interest the trustee could distribute to them, so the trustee becomes a foreign person even though discretion has not been exercised in the spouse's favour.
Ownership chains matter. For residential land, regulation 38(2) exempts an Australian company, or the trustee of a resident trust, that would not be a foreign person if interests held directly in it by certain people with a connection to Australia were set aside. Those include permanent visa holders, Special Category visa holders (or those entitled to that visa) and Australian citizens not ordinarily resident in Australia. A holding by any other foreign person or foreign company in the chain still counts towards the 20% and 40% tests.
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What a foreign company or trust can buy
The residential land rules do not change for entities. Approval is needed whatever the price. New dwellings, off-the-plan homes and vacant land are available with approval, and vacant land generally comes with a four-year build condition. Established dwellings are banned except for redevelopment adding at least 20 dwellings, commercial-scale housing and, for foreign-controlled companies, housing for workers from Pacific island countries and Timor-Leste. See the established home ban guide.
How the states test companies and trusts
State tests are not the same as the federal one. As read from the revenue offices in October 2026:
| New South Wales | Queensland | |
|---|---|---|
| Company is foreign when | A foreign person holds 20% or more, or foreign persons hold 40% or more together, even if incorporated in Australia | Incorporated outside Australia, or foreign persons hold a controlling interest of at least 50% |
| Trust is foreign when | Fixed or unit trust: 20% or 40% tests. Discretionary: foreign unless there is no foreign beneficiary and the deed cannot be amended to make a foreign person a potential beneficiary | At least 50% of trust interests are held by foreign individuals, foreign companies or foreign trusts |
| Surcharge on purchase | 9% of dutiable value | 8% |
| Annual land tax surcharge | 5% of land value | 3% of taxable value above $350,000 |
Victoria charges 8% foreign purchaser additional duty and applies its own tests to companies and trusts, for both the purchase duty and the annual absentee owner surcharge. The State Revenue Office's pages set out those tests, and the Victorian surcharge page has the rates.
Revenue NSW says a foreign trust or company is assessed by looking through each layer of ownership to the people behind it. It also says an SMSF is not automatically exempt: a super fund is generally treated as a fixed trust, and the trustee is generally not foreign if no member is a foreign person.
Worked example
An entity that is foreign for state purposes buys a house for $1,500,000, where the dutiable value equals the price. The purchase surcharge, on top of ordinary transfer duty, is:
- New South Wales: $1,500,000 × 9% = $135,000.
- Victoria: $1,500,000 × 8% = $120,000.
- Queensland: $1,500,000 × 8% = $120,000.
If the land is valued at $900,000, the annual land tax surcharge is $45,000 in New South Wales ($900,000 × 5%) and $16,500 in Queensland (($900,000 minus $350,000) × 3%). These are surcharges only, before ordinary land tax. The state surcharge pages have the full rates.
Exemptions are narrow
Some states have exemptions aimed at entities that add to housing supply. Queensland's exemption applies to transactions entered into on or after 15 December 2025 for Australian-based foreign entities whose commercial activities involve adding to the supply of housing stock. New South Wales has exemptions for eligible build-to-rent developments and for Australian-based developers. Victoria has its own exemption rules, set out by the State Revenue Office. None of these is automatic: each has its own application and evidence requirements.
Keep reading
- Who counts as a foreign person for FIRB?
- Land tax surcharge on trusts with foreign beneficiaries: how each state looks through the trust
- Land tax surcharge for foreign owners: every state and territory compared
- How foreign buyer stamp duty is calculated: worked examples for NSW, Victoria and Queensland
- Australia's ban on foreign buyers of established homes: dates, exceptions and what is still allowed
- Buying property with a citizen or resident partner: what changes for the foreign buyer
Frequently asked questions
Is a company registered in Australia always treated as Australian?
No. Treasury's key concepts note treats an Australian-incorporated company as a foreign person if foreign owners hold enough of it. Revenue NSW also says only overseas-registered companies being affected is a common misconception. The test looks at who owns the shares, not where the company is registered.
Can a family trust with one overseas beneficiary buy?
It depends on the type of trust and the state. For a discretionary trust, Treasury treats each possible beneficiary as holding the maximum share they could receive. Revenue NSW treats the trustee as foreign unless no beneficiary or potential beneficiary is foreign and the deed cannot be amended to allow one. A lawyer with trust expertise can advise.
Can a foreign company buy an established home for its staff?
The established dwelling exception for staff housing in Treasury's guidance is for foreign-controlled companies that employ workers from Pacific island countries and Timor-Leste and are required to provide them housing, including PALM scheme workers. Treasury also says dwellings that are incidental to a larger commercial transaction, such as employee accommodation in remote and rural areas, may be considered for an exception. Other staff housing is not covered by the PALM exception.
Does the exemption for citizens living overseas help their companies?
In some cases. The Regulation exempts an Australian company that would not be a foreign person if interests held directly in it by Australian citizens not ordinarily resident in Australia (and, for residential land, by permanent visa holders) were set aside. Interests held by a foreign company or foreign person elsewhere in the ownership chain are not set aside, so they can still make the company foreign.
Sources
- Guidance Note 2: Key Concepts, version 5, Treasury Foreign Investment website
- Guidance Note 6: Residential Land, version 5 (1 July 2026), Treasury Foreign Investment website
- Foreign Acquisitions and Takeovers Regulation 2015, Federal Register of Legislation
- Surcharge purchaser duty for trusts, Revenue NSW
- Surcharge purchaser duty for corporations, Revenue NSW
- What is surcharge purchaser duty?, Revenue NSW
- What is surcharge land tax?, Revenue NSW
- Understanding foreign purchaser additional duty, State Revenue Office Victoria
- Exemptions, concessions and rules for foreign purchaser additional duty, State Revenue Office Victoria
- Understanding the absentee owner surcharge, State Revenue Office Victoria
- Types of foreign persons for AFAD, Queensland Revenue Office
- Assessing and calculating AFAD, Queensland Revenue Office
- Exemption or ex gratia relief from AFAD, Queensland Revenue Office
- Land tax for foreign companies and trusts, Queensland Revenue Office
Checked 5 October 2026.
firbapproval.com.au is an independent guide. It is not affiliated with, endorsed by or connected to the Foreign Investment Review Board, the Australian Treasury or the Australian Taxation Office. We do not lodge or process applications. Applications are made to the ATO. General information only, not legal, tax, migration or financial advice.