The Duties and Other Legislation Amendment Bill 2016 (Qld) (the Bill) which implements a 3 per cent foreign purchaser surcharge for residential property from 1 October 2016 has now completed its passage through the Queensland Parliament and is awaiting royal assent.

As noted in our TaxTalk Alert dated 15 June 2016, a key feature of the Bill was that it does not provide the Treasurer with a general discretionary power to provide an exemption to foreign purchasers. During the Second Reading Speech (the Speech) before Parliament on 17 June 2016, the Treasurer, Mr Curtis Pitt MP, noted that such a power would be inappropriate as it would result in the delegation of a legislative power to a minister.

However, the Treasurer stated that ex gratia relief supported by yet to be published guidelines may be available to foreign purchasers. During the Speech, the Treasurer indicated that ex gratia relief may be available for priority development areas which significantly contribute to Queensland's economic activity and where accompanying developer contributions are significant. Additionally, the Treasurer indicated that it was the intention of the Queensland State Government to review the relevant Victorian and New South Wales legislation and guidelines and undertake a consultation prior to the commencement of the surcharge on 1 October 2016.

This is a welcome development as it will enable 'eligible' potential foreign purchasers to seek relief from the surcharge.

The Treasurer has also indicated that additional guidelines regarding the operation and administration of the surcharge will be issued by the Queensland Office of State Revenue once the Bill has received royal assent.

The takeaway

Foreign purchasers that are considering directly or indirectly purchasing Queensland residential property should obtain appropriate advice on any potential surcharge exposure and the availability of ex gratia relief.