Skip to content

  • Home
  • COVID-19 Guide
  • COVID-19 AV library
  • Client results
  • Expertise
  • News & Insights
  • People
  • Our DNA
  • Inclusion and Diversity
  • Join us
  • Contact Us
Home / NEWS & INSIGHTS / Insight / QLD land tax changes โ€“ beware when buying, selling and leasing property
Insight 13 September 2019

QLD land tax changes โ€“ beware when buying, selling and leasing property


WHO SHOULD READ THIS

  • Anyone who owns, buys or leases land in Queensland.

THINGS YOU NEED TO KNOW

  • Recent legislative changes may increase certain land tax assessments, and therefore careful consideration should be given to any outgoings adjustment under a land sale contract or any recovery of outgoings under a lease.

WHAT YOU NEED TO DO

  • Review land tax in any adjustments clause (for contracts) or outgoings clause (for leases) to ensure the best outcome.

Do you know how land tax is adjusted under your contract or lease?  Does it deal with foreign resident surcharges and delays in assessments issuing?  Make sure youโ€™re aware of these points in any new or continuing contracts or leases in Queensland.


The 2019 Queensland Budget introduced a number of changes to land tax.  Firstly, the land tax rates for companies and trusts with aggregate landholdings above $5 million and $10 million were increased by 0.25% respectively, and the absentee surcharge rate was increased from 1.5% to 2%.  However, the biggest change was the extension of the absentee surcharge to foreign corporations and trustees of foreign trusts, where it previously only applied to foreign individuals. 

When you get down to the numbers, this can have potentially significant impacts on the holding costs associated with property in Queensland โ€“ for example, a foreign company with aggregate landholdings having an unimproved value of $20 million could see an increase in land tax of over $480,000 per annum.

Now more than ever it is important parties ensure that leases and contracts to purchase property in Queensland appropriately address liability for land tax, particularly where the landholder is foreign (or suspected to be).  In contracts for sale, the contract typically requires an adjustment at settlement for land tax (except in residential sales).  In leases, land tax may form part of the outgoings that are recoverable from a tenant (except in residential or retail leases). 

It is open to the parties to negotiate how land tax liability will be apportioned, which could be:

  • not adjusting or re-allocating land tax liability at all (more common in residential property sales, and mandated in retail leases โ€“ this favours the buyer or tenant);
  • on the amount actually assessed, including any surcharge (this favours the seller or landlord); or
  • on some notional or deemed assessment, which could be determined based on some combination of the below criteria (each of which favours the buyer or tenant):
    • as if the seller or landlord was a natural person (reducing the rates to the individual rates);
    • as if the seller or landlord was resident in Queensland (avoiding any absentee surcharge); and
    • as if the land was the seller or landlordโ€™s only land (avoiding aggregation).

Given the significant impact of the absentee surcharge changes, the Office of State Revenue is currently delaying issuing assessments to foreign companies and trusts, while it considers potential concessions or relief.  While this has been welcomed by the industry, one impact is that it is not possible currently to definitively determine the total land tax if an adjustment is being done based on the assessed amount inclusive of surcharge.  Where a contract is due to settle soon (or before the OSR issues those assessments), alternative arrangements such as retentions may need to be set up to cater for potential liability.

Parties currently negotiating contracts or leases should give very careful consideration to how the land tax adjustments or allocations are intended to operate and ensure the documents reflect that.  If you are a party to an existing contract or lease, you should review the relevant adjustment or outgoings clauses to ensure that they operate appropriately (or look to renegotiate the terms, if there is scope to do so).

For further information on any of the issues raised in this alert please contact our below team.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

About the authors

  • Kristan Conlon

    Partner
  • Duncan Bedford

    Partner
  • Marianne Lloyd-Morgan

    Senior Associate
  • Emile McPhee

    Senior Associate

In other news

FIRB Reforms Article Series โ€“ Part 2: Family Arrangements

30 July 2020Insight

Are loan books next on the block for Australia?

29 July 2020Insight

Unlicensed parties beware – Head contractor exemption to be removed from QBCC Act

28 July 2020Insight

FIRB Reforms Article Series โ€“ Part 1: National Security Businesses

23 July 2020Insight

VIEW ALL NEWS & INSIGHTS

BRISBANE

Level 11, 66 Eagle Street
Brisbane QLD 4000
GPO Box 1855
Brisbane QLD 4001
Tel +61 7 3233 8888
Fax +61 7 3229 9949

 

GET IN TOUCH

    Contact form

    We handle your personal information in accordance with our privacy policy.

    sydney

    Level 32, MLC Centre
    19 Martin Place
    Sydney NSW 2000
    GPO Box 462
    Sydney NSW 2001

    Tel +61 2 8241 5600
    Fax +61 2 8241 5699

     

    GET IN TOUCH

      Contact form


      We handle your personal information in accordance with our privacy policy.

      melbourne

      Level 27, 101 Collins Street
      Melbourne VIC 3000
      GPO Box 2924
      Melbourne VIC 3001

      Tel +61 3 9067 3100
      Fax +61 3 9067 3199

       

      GET IN TOUCH

        Contact form

        We handle your personal information in accordance with our privacy policy.

        follow us

        CLIENT LOGIN

        newcastle

        Level 2, 16 Telford Street
        Newcastle NSW 2300
        PO Box 394
        Newcastle NSW 2300

        Tel +61 2 4914 6900
        Fax +61 2 4914 6999

         

        GET IN TOUCH

          Contact form


          We handle your personal information in accordance with our privacy policy.

          canberra

          Level 9, 2 Phillip Law Street
          Canberra ACT 2601

          Tel +61 2 6243 3699
          Fax +61 2 8241 5699

           

          GET IN TOUCH

            Contact form


            We handle your personal information in accordance with our privacy policy.

            © 2017 McCullough Robertson. Site map Disclaimer Privacy Policy Credit Reporting Policy

            X