Queensland exploration permits and authorities will now be subject to stamp duty, and the top rate of duty is also set to increase - and both changes will be retrospective from 13 January 2012.

Changes to Queensland's exemption from stamp duty for exploration permits were foreshadowed by the previous ALP State Government in its mid-year fiscal statement on 13January 2012, but it was unclear until now what the policy of the incoming Government would be. The mining industry now has some clarity, with the Government moving to bring exploration permits and authorities to prospect into the stamp duty net via the Fiscal Repair Amendment Bill 2012.

Historically, Queensland has had lower rates of stamp duty – with a top marginal rate of 3.75% until a decade ago – and (unlike other jurisdictions) has allowed an exemption on the direct or indirect dealing in exploration tenements.

Exploration permits and landholder duty

Making this change has been comparatively simple. The definition of "land" used to contain an exclusion in respect of exploration permits. This will now be removed, although offshore petroleum permits remain free of duty. As a result, not only will the purchase of an exploration permit now be subject to duty on the higher of consideration or value, but exploration permits will also be treated as land when the shares in a company that holds them are transferred.

As a result, where 50% or more of the shares in a company which owns mining tenements and other land in aggregate worth more than $2million by market value, landholder duty will now apply.

In addition, things "fixed to the land" that may be separately owned, whether or not they are owned by the landholder, are now expressly included in the definition of "land". The Government says this merely clarifies the old law which was confused following a WA landholder decision. This will now bring within the duty net chattels affixed to the land but owned by another party. As a result, in some cases it may be cheaper to transfer the land (or an interest in it) rather than shares in a company that owns the land.

There is a Budget proposal to introduce a "farm-in" exemption in relation to dealing in exploration permits, which presumably will only apply to direct transfers. The scope of this exemption remains to be seen, and is not contained in the Bill.

Retrospectivity

While there was speculation that the previous Government's change of the classification of exploration permits would be accepted by the new Government, it was hoped that the change would not be made retrospective to the 13January 2012 date that had previously been announced.

In the end the retrospective element has been included and the changes will be effective as from 13 January 2012. The largest section of the Bill (insofar as it relates to the Duties Act) is dedicated to inserting a suite of transitional provisions governing dealings in exploration permits between 13January 2012 and the Bill's eventual passage.

In short, unless there was a pre‑existing agreement to acquire at 13January 2012 (even if conditional), then such agreement is now deemed to be dutiable and requiring lodgement or self assessment within 30days of the date of royal assent to the Fiscal Repair Bill. This regime will apply for both landholder duty and transfer duty purposes – and it is not beyond the realms of possibility that some taxpayers may be unaware that they have made a "relevant acquisition" for landholder duty purposes so as to attract duty at all.

Entities and their advisers will need to conduct a thorough survey of the transactions entered into as from 13January 2012 to establish whether there will be a duty liability.

New stamp duty rates

Not only will more transactions now be dutiable, the new rates of duty that will have effect as from the Bill's passage will also apply to transactions within the transitional period. The most relevant is the new rate that applies at 5.75% to the extent that consideration or value exceeds $1million, added to the $38,025 payable on a consideration of $1million.