The Queensland Parliament has enacted legislation to give retrospective effect to transfer duty concessions for resource sector farm-in agreements.

In Queensland, stamp duty has applied to the direct and indirect transfer of mining tenements and certain petroleum authorities since 13 January 2012.

It has always been the intention that certain farm-in agreements would not be subject to such duty. Farm-in agreements are used to share the risk associated with exploration activity.  Generally, under a farm-in agreement, the holder of an exploration authority grants to another party the right to earn a specified interest in the exploration authority by spending a specified amount of the exploration and development of the exploration authority.

To date, the concession has been administered under the terms set out in Public Ruling DA000.12.1. On 11 June 2015 the Queensland Parliament assented to the Payroll Tax Rebate, Revenue and Other Legislation Amendment Act 2015, giving retrospective legislative effect to the concession.

By way of summary:

  • The concession only applies to farm- in agreements that qualify as ‘upfront farm-in agreements’ or ‘deferred farm-in agreements’.
  • Qualifying farm-in agreements will be subject to multiple assessment events. The first will be when a farm- in agreement is entered into, and the Commissioner must reassess the agreement if certain ‘reassessment events’ occur.
  • When assessing qualifying farm-in agreements, special rules will apply to determine the dutiable value, including that the dutiable value does not include an ‘exploration amount’, as defined.

The significance of the concession to determining the dutiable value is that no  duty will be payable on a qualifying farm-in agreement if the only consideration paid or payable is an exploration amount, as defined. Duty will however be payable on any other consideration paid or payable.

The amendments have effect from 13 January 2012, however transitional provisions ensure that actions taken under Public Ruling DA000.12.1 pending commencement of the amendments are recognised.