- Queensland update
The Labor Party’s ‘Back to Work’ budget was handed down on 14 June.
In a contracting economy with dwindling revenue from the resources sector, the temptation to raise revenue from non-voting foreign investors proved too much to resist. Despite an announcement 12 months ago to the contrary, Queensland will now apply transfer duty of 3 per cent on residential property purchases by foreign residents from 1October 2016. The move comes at a time when the Victorian government is increasing its surcharge to 7 per cent and New South Wales have introduced a 4 per cent surcharge.
The Treasurer has justified the move as ensuring foreign investors pay their share for infrastructure and services – but aren’t they already paying the same as the rest of us? At least we know what was discussed at the last Treasurer’s gathering once the topic of tax reform was off the table ...
The devil will be in the detail and we will need to wait and see if Queensland has learned any lessons from the Victorian story, where a number of exemptions were introduced post-implementation to keep the housing industry on an even keel. Key areas of concern include the following.
- What is included in ‘residential property’ to attract the surcharge? Clarity is required on student accommodation, aged care facilities and hotels/motels and the like.
- Will locally operating developers with foreign shareholders that add to local housing supply be disadvantaged over wholly owned Australian developers operating in the same market?
- What happens if a change of use occurs after the initial acquisition?
- The level of additional red tape required to administer the surcharge.
First home buyers will receive another shot in the arm with a 12-month increase of $5,000 to be applied to the once-again renamed Queensland First Home Buyers Grant, now $20,000. The grant will apply for first time home buyers on newly constructed property valued at under $750,000.
The government has committed a further $1.5 billion to the State Infrastructure Fund with a significant portion of the projects to assist regional Queensland. The Townsville Sports Stadium also received a further commitment, taking the state’s funding of the project to $140 million.
Ability of commercial landlords to recover land tax
A recent case addressed the ability of commercial lessors to recover land tax from their tenants where the lease was entered into before 30 June 2009 and provides for its recovery (Wyuna Court Pty Ltd v Vikpro Pty Ltd  QSC 216). Previously, the old Land Tax Act 1915 (Qld) prohibited the ability to recover land tax from the lessee despite what was written into the lease. This act was replaced by the Land Tax Act 2010(Qld) and includes no such prohibition. However, the existing prohibition on recovery from lessees of residential and retail shop tenancies still applies.
Developer concern over amendments to the Vegetation Management Act
In March the State Government announced changes to Queensland’s vegetation management laws that could have unintended consequences on clearing that occurs in areas of urban development.
While the changes are aimed at protecting state assets like the Great Barrier Reef, they will also impact clearing that occurs in urban areas, with the new impost expected to add significantly to the price of affected developments.
The proposed changes are currently being considered through the parliamentary committee process, and a report is due by the end of June 2016.