Publications / Resources
A number of anticipated changes affecting the Queensland resources industry were confirmed when the Queensland Treasurer handed down the Queensland State Budget for 2012/13 on Tuesday.
Duty on exploration tenements
As foreshadowed in the 2011/12 mid year fiscal and economic review (released on 13 January 2012), the Government has now tabled draft legislation that imposes duty on prospecting and exploration permits and authorities to prospect (Exploration Tenements).
Prior to the announcement in January, the transfer of an Exploration Tenement was not dutiable - nor were such tenements treated as land for landholder duty purposes.
However, duty will now apply to the direct or indirect transfer of Exploration Tenements where the agreement to transfer was entered into on or after 13 January 2012 (Start Date). The value of a company’s Exploration Tenements will also form part of that company’s landholdings for landholder duty on share dealings on or after the Start Date.
Taxpayers may lodge the relevant transaction details for transfers which took place on or after the Start Date and which are now liable for duty within 30 days of the date the draft legislation receives royal assent (expected on 17 September 2012) without penalty.
Duty on mining leases
Under the Duties Act 2001 (Qld) (Duties Act), mining leases have always been dutiable property because they constitute a statutory licence. However, the Queensland Office of State Revenue (OSR) has also taken the view that mining leases are land for landholder duty purposes, despite certain legislative provisions and case law to the contrary. The proposed changes to the Duties Act make it clear that from the date the draft legislation receives royal assent, mining leases and all other resource authorities, will be characterised as land for landholder duty purposes. The Government has conceded that these changes were required to address ‘differences in provisions of the Queensland Duties Act and the resource legislation under which resource rights are granted and recent case law’.
This leaves some question as to whether assessments of landholder duty issued by the OSR prior to these changes to the Duties Act which include mining leases in the value of landholdings may be subject to review and a possible reduction.
Other announcements included in the budget that will impact on the duty relating to resources projects include:
- the exemption of exploration and development expenditure incurred in relation to farm-in arrangements. Although the scope and technical design of the exemption has not yet been announced, it is possible this exemption will provide minimal savings to explorers given farm-in expenditure is often not dutiable in any event, and
- the highest marginal rate of duty will increase from 5.25% to 5.75% - effective from the date of royal assent.
If you have any questions regarding these announcements, please contact the McCullough Robertson Stamp Duty team.