A surcharge designed to raise millions and stop foreign investors driving up Canberra property prices has fallen flat, raising just a fraction of the amount predicted by the ACT government.
The Foreign Ownership Surcharge that came into force in July last year has so far netted the territory just $74,979, well short of the approximately $1.3 million a year Chief Minister Andrew Barr said it was expected to raise.
The surcharge adds a further cost to a foreign owner's land tax bill by charging them an additional 0.75 per cent of the property's average unimproved value, unless it is a principal place of residence.
Trusts or corporations incorporated outside Australia are also required to notify the ACT Revenue Office within 30 days of becoming liable for the surcharge, which was supposed to raise $4 million in additional revenue from 2018-19 to 2020-21.
But according to figures obtained under Freedom of Information, just 48 people have told the ACT government they are required to pay, well short of the 200 to 300 Mr Barr said in June were expected to be liable.
The government now admits it might have to step up compliance measures but said it was standing by the charge. The majority of properties were in Belconnen, central Canberra and Gungahlin.
"We expect that it will take some time for all foreign owners who had property in the ACT before the surcharge was introduced to become aware of their obligations and update the ACT Revenue Office accordingly," a spokeswoman for Mr Barr said.
"Compliance activity to identify people who have a liability but have not yet contacted the ACT Revenue Office has commenced and will increase over time."
The spokeswoman said the government had also put procedures in place to identify foreign buyers at the time a property was purchased to ensure the surcharge was imposed from the date of a new purchase.
Under Australia's foreign investment laws, temporary residents are not permitted to purchase established dwellings as investment properties to rent out, or to use as holiday homes. They are usually only permitted to buy one property for use as a principal residence, while foreigners not living here are generally steered towards purchasing new residences and banned from buying established residential properties.
We expect that it will take some time for all foreign owners who had property in the ACT before the surcharge was introduced to become aware of their obligationsACT Government spokeswoman
Canberra Liberals leader Alistair Coe said the surcharge, which is based on a similar scheme in NSW, unfairly disadvantaged renters by driving up the cost of providing rental properties.
"Only Labor would think more taxes is the answer to Canberra's housing affordability crisis," Mr Coe said.
"The Chief Minister has spent hundreds of thousands of dollars travelling the world spruiking investment in Canberra. However, now the government's message is: 'We don't want foreign investment'.
"Either the government is not enforcing [its] own legislation, or [it has] deterred people from investing in Canberra. One way or another, there are no winners."
Mr Barr's spokeswoman said the government would continue to monitor the revenue collection for the surcharge and would review the forecast ahead of the next budget update.
"There are no plans to change or review the arrangements at this time," she said.