Queensland has announced that from 1 July 2011 the existing land rich duty provisions will be replaced by a landholder model. In summary, landholder duty will apply to an acquisition of:
- an interest of 50% or more in an unlisted company holding land in Queensland worth $2 million or more, or
- an interest of 90% or more in a listed company or listed unit trust holding land in Queensland worth $2 million or more.
The announcement by the Queensland Government aligns Queensland’s arrangements with New South Wales, Western Australia, the ACT and the Northern Territory, each of which has enacted landholder provisions. South Australia will adopt the model from 1 July 2011.
‘Land rich’ and ‘Landholder’
Currently, the acquisition of 50% of more of the shares in an unlisted land rich company attracts land rich duty as if the land was being purchased directly. A land rich company is one with at least $1 million of land in Queensland and with land (wherever located) comprising at least 60% of the value of all its property.
The Queensland Government has noted that the current arrangements create a significant incentive for transactions to be structured and valued to avoid the 60% threshold.
The 60% test is removed under the landholder model. Under the new model, if an interest of 50% or more in an unlisted company is acquired and the company holds Queensland land worth $2 million or more, landholder duty will apply in relation to the land.
No changes will be made to duty arrangements for unlisted trusts. That is, for private unit trusts with Queensland dutiable property, any acquisition in the trust will remain dutiable.
Listed landholder duty
Queensland duty presently does not apply to the takeover of listed entities. From 1 July 2011, landholder duty will apply to an acquisition of an interest of 90% or more of a listed company or listed unit trust holding land in Queensland worth $2 million or more (although it will be charged at a concessional rate of 10% of the duty that would otherwise apply). This change, together with the change announced for South Australia, will leave Victoria, Tasmania and the ACT as the only Australian jurisdictions without listed landholder duty.