The Queensland Commissioner of State Revenue (Commissioner), acting under delegated authority from the Under Treasurer pursuant to the Financial Accountability Act 2009 (Qld), has the power to grant relief from additional foreign acquirer duty (AFAD) and the land tax foreign surcharge (LTFS).
On 15 December 2025, the Commissioner released two new rulings in respect of this power, GEN012.1 and LTA000.6.1 (the New Rulings). New versions of the previous ex gratia relief rulings have also been released, DA000.15.5 and LTA000.4.4 (the Previous Rulings), which have been updated to note that these rulings will not apply to transactions occurring from 15 December 2025 (for AFAD relief), and from 30 June 2026 (for LTFS relief).
The New Rulings make both substantive and administrative changes to the ex gratia relief framework, which are outlined below. Brief consideration is also given to new and outstanding issues associated with the ex gratia relief framework.
New Residential Developer Framework
One preliminary change is the consolidation of the principles concerning ex gratia relief from AFAD and LTFS for residential developers into one ruling, being GEN012.1.
These concepts were previously split between the rulings, with DA000.15 providing AFAD relief for significant residential developments and developers, and LTA000.4 including substantial residential development as a potential means of demonstrating that an applicant was making a significant contribution to the Queensland economy and community.
Though not a substantive change, the consolidation of these tests under GEN012.1 should make the ex gratia relief application process more accessible for developers.
Expanded corporate tracing rules
The New Rulings expand the extent to which the Commissioner will have regard to the activities of a corporate applicant’s corporate group when determining whether the eligibility criteria for ex gratia relief are met.
Under the Previous Rulings, the Commissioner limited its consideration to:
- an entity of which the applicant is a wholly owned subsidiary (i.e. the applicant’s parent); and
- other wholly owned subsidiaries of the applicant’s parent.
Under the New Rulings, regard will be had to the contribution made by any entity within the applicant’s corporate group, looking through multiple layers of parent and subsidiary entities (including subsidiaries of the applicant) where required.
Furthermore, the ownership threshold for a parent has been decreased, providing that a company will be a parent of another where they hold at least 90% of the shares in that company, and can cast 90% or more of the votes at a general meeting of the company.
Revised Eligibility Criteria
A number of changes have been made to the eligibility criteria for obtaining AFAD and LTFS ex gratia relief.
Australian-based test
The Australian-based test has been revised to remove the requirement for applicants to obtain more than 50% of the value of their services and materials from Australian contractors and suppliers.
This is a welcome change, as satisfaction of this requirement was cumbersome to prove, and its inclusion was largely unnecessary given that:
- applicants undertaking development works in Australia are inherently likely to contract predominantly with Australian-based contractors and suppliers in any event; and
- applicants claiming to make a significant contribution to the Queensland economy already had to provide detailed information in respect of their Queensland-based contractors and suppliers.
Significant contribution test under LTA000.6.1
The time frame for the ‘significant contribution’ test has been expanded to effectively provide that regard will be had to whether:
- the current activities of the applicant, and their committed activities for the 12 months following the liability date for the land tax year in question (i.e. the preceding 30 June), constitute a significant contribution; and
- the average activities of the applicant in the years preceding the liability date for the land tax year in question (averaging up to 5 consecutive financial years) constitute a significant contribution.
The concept of a ‘significant contribution’ in this ruling captures the guidance from LTA000.4, providing that an applicant will be considered to make a significant contribution to the Queensland economy and community where they:
- employ 75 or more full-time equivalent Queensland employees; and/or
- incur expenditure in Queensland of more than $20 million annually.
Large developments and developers
A key change under the new GEN012.1 is a significant reduction in the number of dwellings a developer is required to produce in order to qualify for LTFS and AFAD relief.
Under the Previous Rulings, ex gratia relief may be granted to:
- applicants undertaking ‘significant developments’, comprising 50 or more dwellings; and
- ‘significant developers’, who produce 50 or more dwellings across their developments over a 12month period (averaging up to 5 consecutive financial years).
Under GEN012.1, ex gratia relief may be granted to:
- applicants undertaking ‘large developments’, comprising 20 or more dwellings; and
- ‘large developers’, who produce 20 or more dwellings across their developments over a 12 month period (averaging up to 5 consecutive financial years).
New Pre-Approval Process
There is a new pre-approval process, similar to the ‘streamlined process’ in the Previous Rulings. Under this mechanism, the Commissioner may pre-approve an entity if it, or its relevant corporate group, has previously received relief from LTFS and AFAD. A pre‑approved entity is not required to submit repeated exemption applications while having this status. This privilege continues until a notifiable event arises, which generally occurs when the entity is in breach of one or more of the requirements for relief.
Issues
Though the changes to the ex gratia relief process effected by GEN012.1 and LTA000.6.1 are generally welcome, it is also noted that:
- the expanded corporate group tracing still does not take into account the activities of trusts. This means that, for example, applicants that hold their land under a unit trust, and undertake development activities through a company within the same group, are unlikely to qualify for ex gratia relief;
- taxpayers who have previously received ex gratia relief, and currently benefit from the streamlined processes set out in the Previous Rulings, will need to re-apply for relief under the New Rulings. This is a compliance burden for taxpayers, and may lead to delays in processing from the QRO; and
- the ‘ex gratia’ nature of AFAD and LTFS relief remains a concern, as it means that the Commissioner has total discretion over the decision of whether or not to grant relief, and that these decisions cannot be appealed.
For further information on any of the issues raised in this alert or assistance with drafting submissions seeking an exemption from the land tax surcharge, please contact Duncan Bedford.