The Queensland Court of Appeal has recently confirmed the right of a landlord under a commercial lease entered into before 30 June 2009 to require a tenant to pay land tax imposed after 30 June 2010 by upholding the decision of the Supreme Court in Wyuna Court Pty Ltd v Vikpro Pty Ltd [2015] QSC 216 (Wyuna v Vikpro).

HISTORICAL TREATMENT OF THE RECOVERY OF LAND TAX BY LANDLORDS IN QUEENSLAND

Section 44A of the Land Tax Act 1915 (Qld) (the old Act) suspended a landlord’s right to recover land tax from a tenant under a commercial lease entered into after 1 January 1992.

Consequential amendments to the old Act in 2009 provided that for leases entered into after 30 June 2009, a landlord of commercial premises could seek payment or reimbursement of land tax from its tenant. The amendments to the old Act retained the prohibition of recovery of land tax for tenants of commercial leases entered into prior to 30 June 2009.

The Land Tax Act 2010 (Qld) (the new Act) repealed and replaced the old Act with effect from 30 June 2010. The new Act contains no transitional provisions which state that section 44A of the old Act continued to apply to existing leases.

In Wyuna v Vikpro it was determined that the deliberate failure by the Government to re-enact an equivalent transitions provision to the 2009 amendments illustrated that the Government intended the previous prohibition on recovering land tax from tenants to end.

The Queensland Court of Appeal in VikPro Pty Ltd v Wyuna Court Pty Ltd [2016] QCA 225 has disallowed an appeal by the tenant of the decision in Wuna v Vikpro, confirming the right of a landlord under a commercial lease entered into before 30 June 2009 to require a tenant to pay land tax imposed after 30 June 2010, if the lease allows it.

KEY TAKEAWAYS CONFIRMED BY THE COURT OF APPEAL DECISION

  • Landlords of Queensland commercial leases (including transfers, renewals or assignments of those leases) entered into before 30 June 2009 are entitled to recover land tax from tenants from 30 June 2010 onwards as long as there are provisions in the lease allowing such recovery.
  • Landlords of Queensland commercial leases entered into on or after 30 June 2009 may continue to recover land tax from lessees from 30 June 2010 onwards as long as there are provisions in the lease allowing such recovery.
  • Tenants who enter into new commercial leases may wish to negotiate with the landlord as to whether land tax is to be recovered by the landlord from the tenant.
  • The current prohibition on recovering land tax from tenants under residential or retail shop leases remains unaffected.

HOW CAN MCINNES WILSON LAWYERS ASSIST?

  • Review existing leases (including those assigned or renewed through the exercise of options), especially those entered into between 1 January 1992 to 30 June 2009, to determine whether land tax is recoverable by the landlord from the tenant post 30 June 2010.
  • Prepare a lease that ensures the recoverability of land tax by the landlord from the tenant.