How the annual vacancy fee applies

Following recently introduced legislation, foreign owners of residential dwellings in Australia are required to pay an annual vacancy fee if their dwelling is not residentially occupied or rented out for more than 183 days (six months) in a year. For these purposes, the relevant year is the ‘vacancy year’, which is each successive period of 12 months starting from the first day the owner has the right to occupy the dwelling. A vacancy year is unique to each dwelling held by a taxpayer.

A dwelling is considered residentially occupied if, for at least 183 days in a vacancy year, any of the following circumstances are met:

  • The owner or a relative of the owner genuinely occupied the dwelling as a residence
  • The dwelling was genuinely occupied as a residence subject to lease or license for minimum terms of 30 days
  • The dwelling was made genuinely available as a residence on the rental market (with minimum terms of 30 days).

The period of residential occupancy does not need to be one continuous block of time. Residential occupancy can be made up of multiple continuous periods of at least 30 days throughout the vacancy year. Further, dwellings made available for short term lease of less than 30 days (including via web based stay sites) are not considered residentially occupied and would not be taken into account in determining whether the 183 day threshold has been satisfied.

If a client can show that for at least 183 days in a vacancy year, the dwelling was incapable of being occupied as a residence they will not be liable to pay the vacancy fee. This may include circumstances where the property is damaged, undergoing renovations, where occupation of the property is restricted by law, or where the usual occupant was absent from the dwelling due to receiving long-term, in-patient, medical or residential care.

Foreign owners of residential property must lodge a vacancy fee return with the ATO within 30 days of the end of each vacancy year, regardless of whether they will be liable for the annual vacancy fee. To lodge a vacancy fee return an owner will need to be registered on the Land and Water Register.


Should you find yourself in situation mentioned above, please come and talk to Tax Ideas Accountants & Advisers (02) 8318 1545

Posted in News & Events, Tax Updates.