Written by

Steven Lee

Mortgage Director, ODIN Mortgage & Tax

10+ years in Australian banking and mortgage lending

Last reviewed

Updated on: July 8, 2026 View profile →

What Is a Nominee Clause and Why Do Expats Use It?

A nominee clause is a contractual provision that permits the original buyer, referred to as “the purchaser or nominee,” to substitute a different legal entity as the registered buyer at or before settlement. This is general information only and does not constitute personal credit advice. It is commonly inserted into off-the-plan contracts and some established property contracts, and it exists precisely because buyers often do not know their final ownership structure at the time of signing.

For Australian expats, the motivation is usually one of the following:

• They sign under their personal name while still deciding whether to hold the property in a family trust or company structure.
• Their tax or accounting advice arrives after exchange, recommending a different entity for negative gearing or asset protection purposes.
• A co-purchaser’s employment or residency status changes between exchange and settlement.
• They want the flexibility of assigning the contract to a spouse or partner who may have different residency or tax implications [xe.com].

The clause sounds like a harmless planning tool. In practice, it is a legal mechanism with tax and lending consequences that must be assessed before it is exercised, not after.

What Are the Stamp Duty and Tax Consequences of Substituting a Nominee?

Building on the flexibility that nominee clauses appear to offer, the harder question is what using that flexibility actually costs. Stamp duty is the most immediate concern, and the answer varies by state.

In most Australian states, exercising a nominee clause is treated as a separate dutiable transaction. This means duty may be assessed twice: once on the original contract and again on the nomination itself. Victoria is the most commonly cited example, where the nomination of a substitute purchaser can attract duty on the greater of the contract price or market value at the time of nomination.

A related but distinct concern is the foreign purchaser surcharge. If the original buyer is an Australian citizen living overseas, they are typically not subject to the surcharge. But if the substitute entity, such as a company or discretionary trust, is assessed as a “foreign person” under state revenue law, the surcharge applies to the nominee, not just the original buyer. The surcharge rates and thresholds vary by state and are subject to change [taxesforexpats.com].

Additional considerations include:

• Capital gains tax (CGT) implications if the nomination is treated as a disposal of the contract.
• Land tax registration requirements for the new entity in the relevant state.
• GST treatment, particularly for off-the-plan purchases where the new entity’s registration status matters.

How Does a Nominee Substitution Affect Your Lender’s Finance Approval?

Stepping back from the tax detail, a separate and equally serious concern is what happens to your loan. An Australian expat home loan approval is granted to a specific borrower entity. When a nominee clause is exercised and the legal purchaser changes, the lender’s approved borrower no longer matches the buyer on the contract of sale.

The practical consequences:

Lender policy on this is not uniform across the 40+ lenders who accept foreign income, and policies are subject to change. The key point is that a nomination cannot be treated as lender-neutral. It must be discussed with your broker before you exercise it, not after [aexphl.com].

Does a Nominee Substitution Affect FIRB Approval?

For expats who required Foreign Investment Review Board (FIRB) approval to purchase, this is a critical and often overlooked issue. FIRB approval is granted to the named applicant for a specific property. It is not transferable to a new legal entity by default.

If you substitute a nominee entity that was not named in the original FIRB application, that entity may be required to seek its own FIRB approval before settlement. Given that FIRB approval timelines can extend considerably, and settlement dates are fixed, this is a serious risk if not managed in advance [solvaproperty.com.au]. It is essential to obtain advice specific to your circumstances from a qualified conveyancer or solicitor before exercising a nominee clause where FIRB approval is involved. ODIN Mortgage does not provide legal advice and is not a law firm.

What Do the New AML/CTF Rules Mean for Nominee Buyers in 2026?

A new compliance dimension arrived in 2026. From 1 July 2026, Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms require source-of-funds verification on property purchasers, including foreign purchasers and nominee entities [zagdim.com]. Where a nominee is substituted at or near settlement, both the original buyer and the nominee entity may be required to produce documentation confirming the origin of funds used in the transaction.

For expats managing a purchase remotely, this means:

• Prepare source-of-funds documentation for both the named buyer and any potential nominee entity in advance.
• Ensure the conveyancer managing settlement is familiar with the new requirements and has collected the relevant documentation before the substitution is lodged.
• Factor in additional lead time; a last-minute nomination submitted days before settlement may now face compliance delays that did not previously exist [zagdim.com].

Frequently Asked Questions

References

1. The expat’s guide to purchasing property in Australia (xe.com)
2. Expat Returner’s Guide to Buying Property in Australia | Solva (solvaproperty.com.au)
3. Buying property in Australia as a foreigner: FIRB rules & taxes |TfE (taxesforexpats.com)
4. Australian Expat Buying Property in Australia | Expat Home Loan Guide (aexphl.com)
5. Australia’s 2026 AML/CTF Reforms: What Foreign Property … (zagdim.com)