On 17 June 2011, the Queensland Parliament passed the Community Ambulance Cover Levy Repeal and Revenue and Other Legislation Amendment Bill 2011 (Qld) which:
- expands the duty base by replacing the former 'land rich' duty regime with a new 'landholder' duty regime that applies to dealings in landholding entities from 1 July 2011; and
- makes other revenue law changes, such as changes to the transfer duty rates and the removal of the stamp duty concession for principal place of residence purchasers (other than first home buyers).
Main change – move to landholder duty model
The key effect of this Bill will be to broaden the State's tax base by:
- capturing transactions where private landholders are below the 60% land value threshold but have Queensland landholdings worth $2 million or more; and
- imposing transfer duty on certain acquisitions in listed landholder companies and trusts.
Importantly, no transitional relief is available for agreements made before 1 July 2011 where completion occurs after 1 July 2011. This is the case even if the target entity is not 'land rich' under the current rules but is a 'landholder' under the new provisions. For example, an entity which has $50 million in property (other than land) and $3 million in landholdings is not 'land rich' under the current rules as less than 60% of the value of all its property relate to its landholdings. However, it will be a 'landholder' under the new rules, and duty may be payable on a transfer of interests in the entity. (See below for more information about transitional relief.).
There will be no changes to the duty provisions for unlisted trusts, including wholesale and widely held trusts.
Summary of changes
Below is a comparison of the key features of the new landholder provisions as they will apply from 1 July 2011 against the current land rich provisions:
||Current land rich regime
||New landholder regime|
- Private companies
- Listed companies and listed unit trusts
|Acquisition interest threshold (private companies)
||50% or more (and some increases in holdings once 50% or more held) on an associate inclusive basis – called 'majority interest'.
||50% or more (and increases in holdings once 50% or more held) on an associate inclusive basis – called 'significant interest'|
|Acquisition interest threshold (listed entities)
||N/a – generally no duty imposed
||90% or more - called 'significant interest'|
|Land holding thresholds:Land holding thresholds:|
- % of total property value represented by land-holdings
|60% or more
||N/a – threshold removed|
- value of land-holdings in Qld
|$1 million or more
||$2 million or more|
|Duty calculation (private companies)
||Value of land held by landholder (including its subsidiary companies or trusts) multiplied by % of associate inclusive interest held
||Value of land held by landholder (including land held by its subsidiary companies or trusts to the extent the landholder would be entitled to the subsidiary's landholdings on a winding up) multiplied by % of associate inclusive interest held (less any 'excluded interests' such as interests acquired > 3 years before current acquisition, or acquired at any time when no Queensland land was held)|
|Duty calculation (listed entities)
||N/a – no duty imposed
||10% of the duty that would be chargeable on a transfer of all Queensland landholdings of the landholder (including land held by subsidiary companies or trusts to the extent the landholder would be entitled to the subsidiary's landholdings on a winding up) at acquisition time (even if less than 100% of the shares are acquired), with a reduction for any 'excluded interests' (including interests acquired before 1 July 2011 or when no Queensland land was held)|
||Acquisitions made within 3 years (on an associate inclusive basis) taken into account in determining if majority interest acquired
Duty payable on increases in majority interest (unless increase in majority interest occurs >3 years after original acquisition or no duty imposed on acquisition of majority interest)
|Private: duty payable on any increase in a significant interest regardless of acquisition timeframe (although interests acquired > 3 years prior to current acquisition excluded from duty calculation) |
Listed: once a significant interest (90% or more) is held, no duty payable on any further acquisition(s) provided interest held under previous dutiable acquisition has not subsequently decreased. There may be multiple impositions of duty where less than 100% of a listed entity is acquired and the majority holder continues to trade its interests on the market – see below.
The new landholder regime will apply to any agreement to acquire shares or units entered into on or after 1 July 2011.
The new landholder regime will also apply to an agreement signed prior to 1 July 2011 that is completed on or after 1 July 2011, in circumstances where the target entity was not land rich at the time of signing of the agreement, but is a landholder at the time of completion of the agreement.
Acquisitions made in listed or private landholders before 1 July 2011 will be counted in determining whether there has been a dutiable acquisition on or after 1 July 2011. However, duty will not be payable in respect of interests acquired prior to 1 July 2011 in a listed landholder or in a private landholder while the private landholder was not land rich.
Goods not included in duty base
Unlike the current position in NSW and WA (and the position from 1 July 2011 in SA), the duty base has not been extended to include goods held by the landholder.
Potential for multiple impositions of duty
There is potential for multiple impositions of duty where 90% or more, but less than 100%, of a listed landholder is acquired, and the majority holder continues to trade in the landholder's shares or units. This is because the exemption for further acquisitions once a significant interest (90% or more) is held only applies if the holding (on which duty was previously imposed) has not decreased since the significant interest was acquired. This means that if the significant interest holder sells even one share or unit, at least the first subsequent acquisition of further shares or units by the majority holder will be subject to duty.
Other Queensland tax changes to be made by the passing of this Bill include:
- transfer duty marginal rates will change from 1 August 2011. Note that the top rate of duty will not change. tCurrent and new rates are set out in the table below:
|Duty rates to 31 July 2011
||Duty rates from 1 August 2011* |
|Up to $5,000
||Up to $5,000
|$5,000 to $75,000
||$1.50 for each $100, or part of $100, over $5,000
||$5,000 to $105,000
||$1.50 for each $100, or part of $100, over $5,000 |
|$75,000 to $540,000
||$1,050 plus $3.50 for each $100, or part of $100, over $75,000
||$105,000 to $480,000
||$1,500 plus $3.50 for each $100, or part of $100, over $105,000 |
|$540,000 to $980,000
||$17,325 plus $4.50 for each $100, or part of $100, over $540,000
||$480,000 to $980,000
||$14,625 plus $4.50 for each $100, or part of $100, over $480,000 |
||$37,125 plus $5.25 for each $100, or part of $100, over $980,000
||$37,125 plus $5.25 for each $100, or part of $100, over $980,000 |
* First home owners may be eligible for further concessions off these rates.
- the 50% land value cap arrangement in respect of land tax will be extended to the 2011/12 financial year;
- the 25% payroll tax rebate for apprentices and trainees will be extended until 30 June 2012; and
- the transfer duty concession for people who are not first home buyers who purchase a home to occupy as their principal place of residence will end on 31 July 2011. However, the first home concession and first home vacant land concession will remain for first homes under $600,000 and vacant land under $400,000.