Changes to Queensland stamp duty - duty treatment of prospecting and exploration permits and authori

• the imposition of duty on direct and indirect transfers of exploration permits and authorities to prospect in Queensland; and
• the deferral of the abolition of duty on the transfer of a Queensland business asset.¹

The changes to the duty treatment of Queensland exploration permits and authorities to prospect may have a significant cost impact to transactions that deal directly or indirectly with exploration permits and authorities to prospect as they will apply to transactions entered into on and after 13 January 2012. 

Corporates and other entities should factor in these additional duty costs in their modelling and costings when undertaking future transactions involving the direct or indirect acquisition of relevant Queensland exploration permits and authorities to prospect, or where they acquire Queensland business assets.

The announced changes in (1) above will require legislative amendments to the Duties Act 2001(Qld) (the Act) to be made.  We note that a general election for members to the Queensland Parliament has been announced and is to be held on 24 March 2012.  We understand that the Queensland Parliament will sit before the announced date.  However, any legislative changes may not occur until after the election and therefore these changes may be some months away from being legislated.  There is also some uncertainty as to whether any new Government will adopt the changes and legislate them.  Notwithstanding this, it is intended that when the amending legislation is enacted, it will have retrospective effect.  In the meantime, the Queensland Commissioner of State Revenue has announced his administrative treatment pending the enactment of legislation (see below).

Changes to duty on exploration permits and authorities to prospect

What are the changes?

Currently, duty is charged on the transfer of mining and petroleum rights subject to exceptions. Transfers of permits and authorities to prospect were previously non-dutiable on the basis that they were excluded from the definitions of both 'land' and 'statutory licence' in the Dictionary in Schedule 6 of the Act.

Pending the enactment of legislation giving effect to the changes, the Queensland Office of State Revenue, in an information sheet² released following the Mid Year Review, states the Commissioner will administer the Act, pending the enactment of legislation, on the basis that included in the definitions of 'land' and 'statutory licence' will be the following:

• prospecting and exploration permits under the Mineral Resources Act 1989;
• authorities to prospect under the Petroleum and Gas (Production and Safety) Act 2004(including those under the previous Petroleum Act 1923);
• geothermal exploration permits under the Geothermal Exploration Act 2004;
• GHG exploration permits under the Greenhouse Gas Storage Act 2009,

and therefore the transfer of these permits and authorities to prospect may attract transfer duty.

As land and statutory licences (by being included in the definition of 'existing right') are dutiable property, transfer duty may also apply where:

• a trust holds such property and there is the creation or termination of a trust, a trust acquisition or trust surrender;
• a partnership's assets includes such property and there is a partnership acquisition.³

Will the changes affect landholder duty?

Yes. Where transactions involve the acquisition of interests in corporations or listed unit trusts and these entities hold these permits and authorities etc, they will be included as landholdings of these entities and will be taken into account for landholder duty where a relevant acquisition in the landholder occurs on or after the start time of these changes.

A person will make a relevant acquisition in accordance with section 163 of the Act as follows:

• if there is an agreement to acquire the interest in the landholder, whether conditional or not, and the next dot point does not apply, the relevant acquisition will be made when the agreement is made;
• if there is an agreement to acquire the interest, whether conditional or not, and the landholder is not a landholder when the agreement is made, but is a landholder when the agreement is completed, the relevant acquisition will be made when the agreement is completed;
• where there is no agreement, the relevant acquisition will be made when the interest is acquired.

What is the start time for these changes and what are the transitional arrangements?

The start time for the changes is as follows:

• for transfer duty, the changes will apply to an agreement to transfer exploration permits and authorities to prospect etc entered into after 10.30am on 13 January 2012;
• for landholder duty, the changes will apply to 'relevant acquisitions' in corporations or listed trusts holding exploration permits and authorities to prospect etc made on or after 10.30am on 13 January 2012.

However, where an agreement for the transfer of a permit was made before 13 January 2012, a subsequent transfer of the permit occurring after 13 January 2012 pursuant to the earlier agreement will not be affected by these changes, that is, the changes will not apply to the transfer.

Deferred abolition of duty on transfers of Queensland business assets

The Queensland Government announced in its 2009-10 Budget that the abolition of transfer duty on the transfer of a Queensland business asset was to be deferred until 1 July 2013. Following the announcement in the Mid Year Review, the Queensland Government will defer the abolition of this duty until the Budget can accommodate the abolition.⁴ Accordingly, no abolition date has been set. As the previous deferral date of 1 July 2013 was not legislated, this measure will not require legislative amendment to take effect.