Queensland Foreign Land Tax Surcharge - Release of Ex Gratia Relief Guidelines

16 July 2020

In brief

The Queensland (QLD) Government has recently released Public Ruling LTA000.4.1 - Guidelines for Ex Gratia Relief from the Land Tax Foreign Surcharge, which sets out the guidelines for ex gratia relief from the QLD land tax foreign surcharge (Guidelines).

The Guidelines, which are similar to those adopted by the Victorian State Revenue Office, include the details of the eligibility criteria for determining the availability of relief, the application process and ongoing notification requirements. To be eligible for ex gratia relief, the following criteria must be satisfied:

  • the foreign entity must be Australian-based;

  • the foreign entity must have complied with all FIRB requirements in relation to the acquisition of land for which ex gratia relief is sought (where applicable);

  • the foreign entity meets its regulatory requirements, including compliance with QLD taxation laws; and

  • the foreign entity conducts commercial activities that make a significant contribution to the QLD economy and community.

Each of these requirements is considered in further detail below.

In detail

The land tax surcharge of 2 per cent which applies to foreign corporations and trustees of foreign trusts (the Surcharge) was announced as part of the QLD State Budget in June 2019 and was initially intended to take effect from 30 June 2019 but was subsequently delayed to 30 June 2020. 

The Surcharge generally applies to all freehold land owned by “foreign companies” or “foreign trusts” (as defined) that is not exempt from general land tax. This is different to the QLD foreign stamp duty surcharge and NSW foreign land tax surcharge which only applies to “residential land”.

In the absence of relief, it is expected that the Surcharge will almost double the annual QLD land tax costs of those affected. 

It is important to note that even Australian incorporated or resident entities can be subject to the Surcharge where they have direct or indirect foreign ownership. Further guidance on the definition of “foreign companies” and “foreign trusts” is available in Public Ruling LTA000.3.1 - Foreign Corporations and foreign trusts - interests of foreign persons and related persons.

Ex gratia relief

At the time the Surcharge was announced, the QLD Government noted it was anticipated that ex gratia relief would be available in limited circumstances, with ex gratia guidelines to be prepared by the QLD Office of State Revenue (QOSR) in consultation with industry bodies and released by 31 July 2019. However, following initial feedback and submissions from industry bodies and various stakeholders, the consultation process was extended and the release of the Guidelines was delayed and only released in July 2020 in the form of Public Ruling LTA000.4.1.

The QLD Government announced the waiver of the application of the Surcharge for the 2019-20 land tax year as part of its COVID-19 land tax relief measures. Accordingly, the first application of the Surcharge will be on land tax assessments for the 2020-21 land tax year (i.e. based on ownership of land as at 30 June 2020), which will begin to issue in October 2020.

Despite the significant lobbying efforts of the Property Council, unlike Victoria, the Guidelines do not automatically exclude publicly listed entities and widely held trusts. Accordingly, these entities holding QLD land will need to consider whether they constitute a “foreign company” or “foreign trust” as at 30 June of each year, and if eligible lodge an application for ex gratia relief. The Property Council has announced that it intends to continue to lobby the QOSR on this issue, so it is possible that these entities may be excluded from the Surcharge in the future. 

In addition, unlike other States, the Surcharge will also apply to foreign-owned primary production land. This is due to unique provisions in QLD which generally prevent the application of the primary production exemption from land tax in circumstances where foreign persons have a direct or indirect interest in the land. As a result, foreign-owned primary producers with significant land holdings in QLD could be required to pay annual land tax at a rate of up to 4.75 per cent in QLD, compared to no land tax in other States.

Criteria to be satisfied

The Guidelines set out in detail the factors that the QOSR will consider in determining whether each of the individual eligibility criteria are met. The more of these factors that are established, the stronger the likelihood of demonstrating that the criteria will be met. Further details on each criteria are set out below.


The factors the QOSR will consider in determining whether a foreign entity satisfies the condition of being “Australian-based” include, but are not limited to:

  • head office or principal place of business is in Australia,

  • significant management staff and office presence are in Australia,

  • entity employs Australian citizens or permanent residents,

  • entity carries on business in Australia,

  • considerable level of Australian participation in the entity (e.g. decisions relating to QLD commercial activities are primarily made by management or employees in Australia), or

  • entity primarily contracts for services and materials of Australian contractors and suppliers for its commercial activities in Australia (i.e. 50 per cent or more).  

Commercial activities which make a significant contribution to the QLD economy and community

The extent to which the foreign entity conducts commercial activities in QLD, engages local labour and utilises local materials and services will be key considerations for the QOSR in determining whether the entity makes a “significant contribution” to the QLD economy and community. 

Importantly, in determining whether a foreign entity makes a significant contribution, where the foreign entity is wholly owned by a parent entity, the commercial activities of the parent entity and any entity that is 100% owned by the same parent entity may be considered. This acknowledges that it is common in corporate structures for the land ownership to be held separately from the commercial activities of the business. 

Specifically, the QOSR will have regard to:

  • the size of the entity’s commercial activities relative to their landholdings.

  • the number of local workers engaged (e.g. 75 or more full-time equivalent employees (not labour hire or contractors) in QLD).

  • the amount expended on local resources, such as materials and services (e.g. $20 million annually, comprising QLD payroll tax and land tax liabilities, expenditure on QLD goods and services, and wages paid to QLD residents).

  • the extent of commercial activities in QLD, particularly if the commercial activities are significant to the particular region and/or industry in which the activities are undertaken, having regard to factors specific to the context of the region and/or industry (e.g. less than 75 employees may be sufficient where the entity is a major employer in regional QLD). 

The examples set out above are taken from the Guidelines. At this stage it is expected that the figures of 75 employees and $20 million of expenditure have been included as a guide only rather than minimum thresholds, and that each foreign entity will be considered on a case by case basis. However, we expect further clarification on the QOSR’s practice will become available as they begin to consider applications.

Foreign property developers may also be considered as making a “significant contribution” while development activities are being undertaken. In considering whether the developer is making a significant contribution to the QLD economy, the QOSR will consider the extent and duration of the development activities, and whether the development is being carried out on land that is in a priority development area or part of a coordinated project as declared under the relevant legislation.

Ex gratia relief may also be available for foreign entities that cannot demonstrate a significant contribution as at 30 June but have committed future commercial activities within the next 12 months, which will result in a significant contribution to the QLD economy (having regard to the factors set out above). 

FIRB and other regulatory requirements

In addition to the above, the entity will also need to provide information showing that it has met its regulatory requirements, such as compliance with ASX listing rulings, ASIC requirements and QLD taxation laws.

The QOSR will also consider compliance with FIRB requirements in respect of the acquisition of the relevant land, including ensuring approval was obtained and compliance with any conditions associated with the approval. 

Application process and ongoing notification requirements

Where the QOSR determines that a foreign entity satisfies the conditions for ex gratia relief, relief will apply to all QLD land owned by the foreign entity and the Surcharge should not be payable in respect of this land. However, general land tax will still be required to be paid. 

Once granted, ex gratia relief should continue to apply for as long as the foreign entity continues to satisfy the conditions for relief. However, unlike Victoria, the foreign entity will need to provide a statutory declaration on an annual basis confirming the conditions will be met for that year. 

Ex gratia relief is not automatic and an application must be made to the QOSR, either prospectively or retrospectively. Foreign taxpayers considering purchasing land will also be able to apply for in-principle approval that ex gratia relief will apply to certain land. Where in principle pre-approval is granted, a further application for ex gratia approval will need to be made once the relevant liability for land tax arises.

The takeaway

Entities with foreign ownership and QLD freehold land should seek to confirm whether the Surcharge applies to them, and if so, consider whether they may be eligible for ex gratia relief having regard to the criteria set out in the Guidelines. 

Taxpayers who may be subject to the Surcharge should have received letters from the QOSR in July and August last year, requesting them to declare their foreign status through an online portal. As taxpayers have a positive obligation to inform the QOSR if their land tax assessment is incorrect, it is important that taxpayers that fall within the Surcharge provisions notify the QOSR if the Surcharge is omitted from their 2020-21 land tax assessment. Failure to do so may result in the imposition of penalties and interest at a later date.  

Although the issue of 2020-21 land tax assessments has been delayed to October 2020, we strongly recommend potentially affected taxpayers seek to lodge their applications for relief as soon as possible so as to obtain a determination prior to the due date of their land tax payment. This will assist in removing the administrative burden of paying the Surcharge upfront and seeking a refund once relief has been granted, and will provide developers and businesses with greater certainty and the ability to better manage cash flows.

As the Surcharge will almost double the annual land tax payable by affected taxpayers, it is very important that potential taxpayers confirm the impact of the Surcharge on their assets and their potential eligibility for ex gratia relief. The process of evaluating eligibility and applying for relief requires gathering and disseminating a large amount of information regarding the relevant land and business operations. It is important that this is presented to the QLD Revenue Office in a way that is easy to understand, aligns with the relevant criteria and is supported by as much documentary evidence as possible. 

Our National Stamp Duty and Land Tax Team has been helping many taxpayers during the consultation phase with preparing submissions regarding the proposed content and application of the Guidelines. In addition, through their work with the equivalent Victorian surcharge and associated relief, they have extensive experience working through the process in preparing land tax ex gratia applications. Our team is skilled and prepared to assist clients with determining their potential eligibility and applying for relief. 

Contact us

Rachael Cullen

Partner, Tax, PwC Australia

Tel: +61 409 470 495

Barry Diamond

Partner, State Taxes, PwC Australia

Tel: +61 (3) 8603 1118

Rachael Munro

Partner, Tax Controversy and Dispute Resolution, PwC Australia

Tel: +61 416 108 657

Cherie Mulyono

Partner, State Taxes & Shine (PwC's LGBTIQ+ network), PwC Australia

Tel: +61 2 8266 1055

Jess Fantin

Partner, PwC Australia

Tel: +61 (7) 3257 5501