By Justin Byrne, Special Counsel
Earlier this year, the Queensland Government announced significant changes to the duty treatment of transactions involving resources exploration tenements in the State. Once amending legislation is enacted, agreements related to exploration tenements entered into after 13 January 2012 must be submitted to the OSR for the assessment of duty.
Here, partner Martin Klapper and special counsel Justin Byrne discuss the implications of these changes for resources companies with exploration tenements in Queensland.
- Major reforms are to be made to the duties legislation in Queensland, to operate retrospectively from 10.30am on 13 January 2012. While legislation has not yet been introduced to give effect to the reforms, an amendment to the definition of "land" and "statutory licence" under the duties legislation is expected.
- The Department of Employment, Economic Development and Innovation (DEEDI) and the Office of State Revenue (OSR) have provided assurances that any agreement involving an exploration tenement entered into before 10.30am on 13 January 2012 will not be subject to the changes.
- The OSR and DEEDI have also advised, pending the enactment of amending legislation, that it will not be mandatory to submit transfers of exploration tenements entered into after 13 January 2012 for an assessment of duty, and that unstamped transfers will continue to be accepted by DEEDI. Duty will only be collected on agreements affected by the changes where applicants opt to lodge relevant documents for assessment and pay the duty assessed.
When the changes will apply
The changes will apply when:
- an agreement is entered into at a time that is at or after 10.30am on 13 January 2012 (referred to here as the 'start time'); and
- the agreement involves the transfer or assignment of an exploration tenement under any of the State's resources acts, including for coal, mineral and petroleum exploration tenements.
The changes are broad enough to apply to agreements involving any of the following:
- The creation, variation or assignment of joint venture interests
- The creation or variation of partnership interests (particularly where an exploration tenement is a partnership asset)
- Changes in unit trust interests or a transfer or issue of units in a unit trust
- Entering into a mining right agreement for an exploration tenement or varying rights under a mining rights agreement for an exploration tenement
- The creation or variation of farmin/farmout agreements involving exploration tenements
- Changes in company shareholdings (including the transfer or issue of shares in a company) in circumstances where the company is the holder of one or more exploration tenements
Further, where there is a change of percentage ownership between existing permit holders, the transfer of permits (or of a part interest in a permit) will attract duty and will need to be assessed by the OSR.
The changes will not apply to any agreements entered into before the start time, regardless of when the transaction contemplated by the agreement is performed or when the agreement is registered.
It is currently not clear what is meant by the 'agreement date'. This may refer to either:
- the date the agreement was entered into;
- the date the dealing (evidencing the transfer) was executed; or
- the date the transfer documents were executed.
Legislation will be enacted to implement these changes, which will have retrospective effect to the start time.
The impact of these changes before the legislation is enacted
Until the duties legislation comes into force, duty in relation to the transactions affected will only be collected where the taxpayer elects to lodge the documents with the OSR for assessment and pay the duty assessed.
DEEDI has confirmed that it will accept transfers of exploration tenements whether or not they have been assessed and stamped by the OSR.
If a party to a transaction opts not to lodge the documents with the OSR, the parties will still be liable to pay duty if the legislation is subsequently enacted with retrospective force to the start time. There is a risk that these parties may be charged interest on any duty payable, although the OSR's position on this is not clear at this stage.
The impact of the changes after the legislation is enacted
Once the legislation commences, it will be mandatory for parties to lodge the relevant documents with the OSR for assessment, and pay the duty assessed, where the transaction falls within the scope of the changes.
Presumably, following the enactment of the legislation, DEEDI will no longer accept transfers which were entered into at or after the start date which have not been assessed for duty.
Once the legislation is enacted, if a party alleges that an agreement was entered into before the start date, DEEDI will require a statutory declaration to be lodged by the parties confirming the contract date.
At this time, the Government has not indicated when the amending legislation will be passed. We will continue to monitor any changes and will provide more information as it comes to hand.
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