The Queensland Government has recently begun the community engagement stage of preparing the Solar Farm Guidelines, which it hopes to finalise in the second half of 2018.

With 16 large-scale solar farms already under construction across the State and more than 40 potential projects in the pipeline, it appears the solar farm industry in regional Queensland is about to explode.

The development of solar farms on agricultural land is a new way for landowners to diversify their income stream. However, you need expert legal and taxation advice before entering into any arrangement with a solar farm provider.

Not all land is created equal; only some land is zoned to allow this use. Where zoning does allow solar farms, you need to consider of the following issues.

What will the property arrangements be?

There are many different options: licences, leases, or a straight acquisition by the solar company. Your own unique commercial and personal imperatives will influence this decision, but you need to be aware of the tax and legal implications for choosing one tenure type over another.

How will the land be valued?

In Queensland, the accepted valuation method for land is the ‘highest and best use’ but, with a solar farm development on agricultural land, should the highest and best use be agricultural land or a solar farm? The answer could have a significant impact on the value of your land.

What protection is in place?

How will you be protected if the solar farm operator:

  • causes contamination or other biosecurity/environmental damage; or
  • goes bankrupt?

What will the tax implications be for your preferred commercial and property arrangements?

A leasing arrangement will generally result in the land owner including the lease payments in the land owner’s assessable income.

A sale of property will generally result in the land owner having a capital gain, which might be reduced under the small business CGT concessions if particular conditions are satisfied.

Consider the implications before you negotiate

It is imperative to consider the implications of all of these issues before negotiating with a solar farm proponent.