Decoding Australia’s Annual Vacancy Fee

Are you an owner of residential property in Australia? If so, understanding Australia’s Annual Vacancy Fee is crucial for your financial planning and compliance with tax regulations. In this article, we will delve into this important aspect of property ownership and help you navigate the intricacies of the Annual Vacancy Fee.

What Is the Annual Vacancy Fee?

The Annual Vacancy Fee is a part of Australia’s foreign investment framework, introduced to encourage foreign property investors to make their residential properties available for rent. The aim is to increase the housing supply for Australians by ensuring that properties owned by foreign investors are not left vacant.

Who Needs to Pay the Annual Vacancy Fee?

This fee applies to foreign individuals, corporations, and trustees who own residential property in Australia. It is essential to note that Australian citizens and permanent residents are exempt from this fee.

Key Points to Understand:

  1. Reporting Requirements: Foreign property owners must report to the Australian Taxation Office (ATO) each year regarding the use of their property. This report is mandatory, even if the property is not vacant.
  2. Fee Amount: The Annual Vacancy Fee amount can vary, but it is typically based on the property’s value at the time of approval. The fee is calculated based on the property’s capital improved value, and the ATO provides guidelines for calculating this.
  3. Calculating Vacancy: If the property is vacant for a total of 183 days or more in a 12-month period, it is considered a “vacant property.” This period doesn’t need to be continuous. It accumulates over the year. If the property is not vacant, no fee is due.
  4. Exemptions and Concessions: Certain exemptions and concessions may apply. For instance, if you’re actively trying to rent the property or it’s under renovation, you may be eligible for a concession or exemption.

Why Compliance Is Important:

Compliance with the Annual Vacancy Fee is crucial for several reasons:

  1. Financial Implications: Non-compliance can result in significant financial penalties, and the ATO is known to be vigilant in enforcing this fee.
  2. Avoiding Legal Issues: Complying with this requirement ensures that you avoid legal issues and maintain a good standing with Australian authorities.
  3. Supporting the Housing Market: This fee helps support the Australian housing market by ensuring properties are used for their intended purpose, thereby addressing potential housing shortages.

Seeking Professional Assistance:

Navigating the complexities of the Annual Vacancy Fee can be challenging, particularly for foreign property owners. Seeking professional guidance is a wise step to ensure compliance and optimize your financial situation.


Understanding Australia’s Annual Vacancy Fee and its implications is a fundamental part of property ownership for foreign investors. To ensure compliance and make informed financial decisions, it’s advisable to consult with experts who are well-versed in Australian tax regulations. EndureGo Tax, your expert companion in Inner West Sydney, is here to assist you in comprehending this crucial aspect of property investment, ensuring that you meet your financial obligations while safeguarding your investment’s prosperity.