Publications / Food and Agribusiness

7 Feb 11
Major changes to Queensland land rich duty - timing is critical

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Queensland Treasurer Andrew Fraser has announced changes to Queensland’s land rich duty regime to apply from July 2011. The current ‘land rich’ duty model is to be replaced by the much broader ‘landholder’ duty model.

Currently, land rich duty is imposed on the acquisition of 50% or more of the shares in an unlisted land rich company based on the market value of the company’s landholdings ignoring liabilities. A company is land rich if:

  • it holds land in Queensland with a market value of at least $1 million, and
  • land (wherever located) makes up at least 60% of the value of all of the company’s assets.

Under the proposed changes, landholder duty will be charged on the acquisition of:

  • 50% or more of the shares in an unlisted company holding land in Queensland worth $2 million or more, or
  • 90% or more of the shares in a listed company or listed unit trust holding land in Queensland worth $2 million or more.

It is not yet clear whether landholder duty will be extended beyond the value of land to also include the value of the company’s goods, as is the case in New South Wales and Western Australia where the landholder duty model has already been adopted. If so, this will be a significant expansion of the duty base in Queensland. In the Northern Territory, where the landholder duty model is also in place, landholder duty is calculated only on the unencumbered land assets of the company.

Removal of the 60% land threshold will mean that far more companies are caught given the only test for a landholder is that it holds land in Queensland worth $2 million or more. Importantly, duty will also apply to the takeover of listed entities, but at a concessional rate of 10% of the duty that would otherwise apply.

It is expected that the changes will result in an estimated additional $30 million in revenue in 2011/2012.

The timing of any proposed transactions should be considered in light of the impact these changes will have on the stamp duty cost to those transactions.

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus 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.

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