The Queensland Government has recently announced changes to the duty applicable to resources tenements (RTs) in Queensland. The changes, which have significant implications on the mining and petroleum sectors, if assented to, will apply retrospectively from 10:30am on 12 January 2012 (Announcement Time). These amendments purport to extend transfer and landholder duty in respect of the following:
- Prospecting permits and exploration permits (EPs) under the Mineral Resources Act 1989 (Qld);
- Authorities to prospect under the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (including authorities issued under the preceding Petroleum Act 1923 (Qld));
- Geothermal EPs under the Geothermal Exploration Act 2004 (Qld); and
- Greenhouse gas EPs under the Greenhouse Gas Storage Act 2009 (Qld).
Dealings with RTs currently do not attract duty as the definition of land under the Duties Act 2001 (Qld) (Duties Act) specifically excludes resource exploration tenements. However, if the proposed changes go ahead, RTs will be treated as ‘dutiable property’ and ‘land’. If introduced, RTs will be treated similarly to a statutory licence for the purpose of transfer duty and as interests in land for the purposes of landholder duty.
The proposed amendments are likely to cause an increase the number of transactions attracting duty in Queensland and in particular, increase the duty costs on RT transactions within the State.
These changes may mean that up to 5.25% duty is payable on the transfer of legal or beneficial interests in RTs, grants of rights in RTs (other than the RTs itself), transactions involving the creation or termination of, or changes to, trusts or partnerships which hold RTs either directly or indirectly and particular acquisitions of shares in companies.
Due to uncertainty relating to whether the amendments will be introduced and the speculation surrounding the changes to be made, the full effect that the amendments will have is not yet known. It is likely that duty will be payable on RT transactions entered into on or after the Announcement Time, but will not be payable on transactions pursuant to an agreement made before this time. It is uncertain how options, farm-in agreements or deals publicly expressed prior to this Announcement Time will be affected.
Parties who believe they may be affected by the proposed amendments should take care to review any existing or proposed RT transactions that they have entered into or are yet to complete and seek updated duty advice.