The Queensland Office of State Revenue has issued a ruling on
how it will apply the transfer duty exemption for farm-ins.
It is proposed that the exemptions will be incorporated in
future legislation, and this ruling has been issued pending such
Some important points to consider:
Transfer duty will not apply to a farm-in agreement where the
only consideration for the agreement is an exploration amount. The
only amount upon which duty is payable is for any other
consideration not comprising an exploration amount (for example,
upfront cash payments, payments for mining information or cash
payments upon the actual transfer of the interest).
In relation to a staged farm-in, duty will be assessed and
payable on each stage as and when that stage occurs (rather than
duty being assessed on all stages upfront).
Transfer duty will be reassessed where the consideration (other
than exploration amounts) is altered or additional consideration is
paid (for example, where an agreement requires both an upfront cash
payment and a subsequent cash payment upon the ultimate transfer of
the interest). In these circumstances, the parties must lodge
documents for reassessment within 14 or 30 days (depending on
circumstances). A credit will apply to duty already paid.
Duty will not arise on reassignments of interest to the
The critical date for when these exemptions apply is 10:30am on
13 January 2012. That is, transfer duty exemptions will only apply
a farm-in agreement made or entered into at or after 10:30am on
13 January 2012; or
a transfer made at or after 10:30am on 13 January 2012,
regardless of when the associated farm-in was entered into.
Consider the following example involving a staged farm-in
agreement between an exploration permit holder (X) and a party
farming into the project (Y).
Consideration paid to X by Y
Type of consideration
Rights gained by Y
Transfer duty applies?
Entry into the agreement
Right to acquire a 20% interest in the permit
Access to mining information
Transfer of 20% interest in the permit (Transfer
Right to acquire a further 30% interest in the permit
Transfer of a 30% interest in the permit (Transfer
At each stage, the transfer duty will be assessed cumulatively,
with credit provided for duty previously paid. Duty assessment for
this example would take place as follows:
If Transfer 1 occurs, duty will be payable on the amount of
$510,000, being the sum of the consideration at stages 1, 3 and
If Transfer 2 occurs, duty will be payable on the amount of
$910,000, being the sum of the consideration at stages 1, 3, 4, and
6. A credit will apply for duty previously paid in relation to
stages 1, 3 and 4.
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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