Australia: New farm-in exemption for the mining sector has a sting in the tail

Key Points:

Details of the promised exemption from transfer duty for Queensland exploration authorities have now been released, but there's a sting in the tail for the transfer of mining information.

Historically, Queensland was a friendly jurisdiction for the mining sector, with comparatively low duty rates (which although not as low as they were, are still among the country's best) and with exploration tenements of all types falling outside the duty net.

Changes to Queensland duty laws, implemented last year by the Fiscal Repair Amendment Act 2012 (and first announced in February 2012) expanded the mining industry's liabilities with respect to transfer duty, bringing Exploration Permits within the definition of "land". However, the Government stated that it would introduce an exemption for farm-in agreements with respect to exploration authorities, broadly in line with that existing in some other States.

That exemption remains to be legislated, but on 27 June 2013, the Commissioner for State Revenue issued Public Ruling DA000.12.1 Transfer duty - Exemption for farm-in transactions in the resources sector, detailing concessional administrative arrangements giving effect to the farm-in agreements exemption, pending a legislative solution.

A farm-in agreement typically involves one party (known as the farmee) undertaking to incur expenditure in the exploration or development of land subject to an exploration authority held by another party (the farmor) in return for an interest in the authority (or in a later tenement developed out of the authority, such as a mining lease). The interest might be transferred before any amount is expended, or after the amount has been expended, or in stages.

General position of farm-in transactions

Where the only consideration for an interest in an exploration tenement is expenditure (or moneys agreed to be expended) on exploration, the Ruling provides that no duty is payable on transfer of the interest.

The Ruling makes it clear that the exemption only extends as far as money actually invested in the "exploration or development" of the land the subject of the exploration authority. Consequently, all other consideration provided to the farmor by the farmee for the interest in the exploration authority is dutiable. Further, the exemption only applies to agreements that do not form part of an arrangement to avoid duty.

The concession does not apply to the transfer of an interest tenements other than the exploration permit itself. Nor does it apply to a sale or issue of shares in a company which holds an exploration permit (ie. an indirect acquisition will be subject to landholder duty without benefit of any farm-in concession).

Accordingly the ruling is somewhat limited in scope.

The potential sting in the tail

The Ruling appears to be putting forward an ambit claim to assess all moneys payable under a farm-in agreement (save amounts directly incurred on exploration) and thus seeks duty on payments for "mining information". That is said to be the basis that "All consideration for a farm-in agreement will be taken into account irrespective of its nature" (see footnote 3 and the example in the Ruling).

Mining information is not "dutiable property". Presumably the transfer of mining information without more will remain exempt from duty, but the impact of the aggregation provisions may mean that it is not as simple as providing for payment for any mining information in a separate contemporaneous document.

Timing of assessments

The timing of the assessment of any transfer duty payable on these agreements depends on the structure of the agreement and the timing of the transfer of any interest.

Deferred farm-in agreements

A deferred farm-in agreements is an agreement where the transfer of the interest in the exploration authority occurs after investment by the farmee in exploration activity. These agreements, will be assessed at two distinct stages; at the time of granting the agreement and at the time any transfer of interest to the farmee. Where the agreement provides for the transfer of the interest in the exploration authority in stages, the duty payable will be reassessed at each transfer stage.

For example (based examples in the Ruling), an agreement may exist between two parties where the farmee agrees to pay:

  1. $10,000 to the farmor for entering into the agreement;
  2. $200,000 to the farmor upon the transfer of a 25% interest, to occur once the farmee has invested $1,000,000;
  3. $300,000 to the farmor upon the transfer of a further 25% interest, to occur once the farmee has invested an additional $500,000.

In this case, transfer duty will be assessed in three stages.

Initially, duty will be assessed on the $10,000 the farmor is receiving for entering into the agreement.

Once the first interest transfer occurs, duty will be reassessed on $210,000 - all the consideration paid to the farmor at that stage which does not form part of the investment into the exploration and development of the exploration authority – and the agreement will be stamped for the first time.

Finally, the duty will be reassessed on $510,000 at the time of the second interest transfer and the agreement will be stamped a second time. A credit will apply at the time of each transfer to account for any duty previously paid.

Upfront farm-in agreements

An upfront farm-in agreement is one under which the interest in the exploration authority is immediately transferred to the farmee. The farmee's continued interest in the land is subject to incurring an agreed amount of expenditure by a set date (the expenditure completion date). Liability for transfer duty arises at the time of transfer and the farmee must lodge the agreement for assessment with the Commissioner within 14 days of the transfer.

A failure by the farmee to incur the agreed exploration amount may give rise to transfer duty issues for the parties, including the loss of the benefit of the exemption. Where the agreed amount has not been incurred by the expenditure completion date, the farmee must inform the Commissioner of the failure within 30 days of that date.

In these circumstances, in order to avoid the application of duty, the parties must take one of two steps:

  1. agree to extend the timeframe for the farmee to invest the agreed amount; or
  2. effect a transfer of the farmee's interest back to the farmor – as a transfer of the farmee's interest back to the farmor in respect of an upfront farm-in agreement may occur at any time without attracting duty.

If the parties fail to come to such an agreement, or where the agreement is made to avoid paying duty on an otherwise dutiable transfer, the Commissioner will reassess the farm-in agreement on the basis that the exemption does not apply.

Special transitional rules apply such that farm-ins entered into between 13 February 2012 and the present date which have not been lodged for assessment of duty now must be lodged by 6 September 2013.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.