Queensland Releases New Guidance For Seeking Exemptions From The Foreign Stamp Duty And Land Tax Surcharges

The Queensland Government on 15 December 2025 published public rulings GEN012.1 (GEN Ruling) and LTA000.6.1 (LTA Ruling) regarding the new 'administrative arrangements' that govern exemptions from additional foreign acquirer duty (AFAD) under the Duties Act 2001 (Duties Act) and land tax foreign surcharge (LTFS) under the Land Tax Act 2010 (Land Tax Act). This comes after the announcement in the 2025-2026 Budget Speech in June this year that the Queensland Government would streamline and simplify the ex gratia relief process for LTFS and AFAD.

This will likely be a welcome development, given the inconsistent and strict application of the ex gratia regime previously in place. Whether this represents a meaningful change will largely depend on whether the reforms cause the Queensland Revenue Office to change their practice and adopt a more holistic view to the applications.

The Rulings only apply to transfers of (or agreements to transfer) AFAD residential land where the transfer duty liability arises on or after 15 December 2025, and any liabilities for land tax arising on or after 30 June 2026. For liabilities that arise before those dates, the pre-existing rulings concerning ex gratia relief continue to apply (being DA000.15.5 and LTA000.4.4).

Overview

In Queensland, certain transactions that are liable for transfer duty, landholder duty or corporate trustee duty are subject to AFAD, which is an additional 8% surcharge if the acquirer is a foreign person and the land is residential (AFAD residential land). Similarly, foreign owners (of all land, not just residential) are subject to the LTFS which is 3% in addition to the general rate of land tax.

The GEN Ruling brings in exemptions from both AFAD and LTFS primarily based on whether the land-owner is a 'large developer' (and for AFAD based on the size of the specific development on the land), while the LTA Ruling adds an exemption (solely in respect of LTFS) where the land-owner's commercial activities make a 'significant contribution'.

The reforms also include the introduction of a new pre-approval process for members of the same corporate group, the expansion of corporate group tracing rules, and changes to the broader eligibility criteria. Importantly, while the previous scheme was one of ex gratia relief dependent on the Commissioner's discretion, the Rulings (at least at face value) indicate that if the requirements for the exemption are met, relief will be granted.

While the new regime is phrased as less discretionary, with clearer requirements, it is nonetheless an 'administrative arrangement'. The recent Queensland Supreme Court decision in Karrabin Estate v Commissioner of State Revenue (see previous post here), is relevant, with Freeburn J emphasising that these schemes are purely discretionary (even where the taxpayer has met the published criteria) and not subject to judicial challenge.

Exemptions

AFAD

AFAD is not imposed on the transfer of (or agreement to transfer) AFAD residential land, if (at the time the liability arises):

• the entity requirements (see below) are satisfied; and
• either: (1) the entity or the relevant corporate group is a large developer; or (2) the land is a qualifying development (the 'qualifying development' limb does not apply to landholder duty or corporate trustee duty).

LTFS – General Exemption

LTFS is not imposed on taxable land if:

• the entity requirements below are satisfied;
• the entity or the relevant corporate group is a large developer; and
• the size and scale of the activities conducted by the entity or its corporate group are proportionate to the taxable land for which the exemption is sought.

There is a degree of correlation between this exemption and the AFAD exemption – where an acquisition is exempt from AFAD, and an entity (or the corporate group) is awaiting planning approval for land, the land will be taken to be used for development activity for 2 financial years starting from 1 July, after the acquisition. The intent of this concession is to extend the availability of relief into land tax years where no substantive development activity is being carried out pending planning approval. However, it remains necessary to satisfy the large developer test in relation to the total development period (i.e. in each land tax year).

The LTFS exemption cannot be sought alongside the concession for an eligible build-to-rent development.

LTFS – Significant Contribution Exemption

The LTA Ruling provides for an additional exemption from LTFS where:

• the entity requirements below are satisfied;
• the entity or the relevant corporate group either: (1) conducts commercial activities in Queensland that make a significant contribution to the Queensland economy and community; or (2) is a significant contributor; and
• the size and scale of the activities conducted by the entity or its corporate group are proportionate to the taxable land for which the exemption is sought.

Definitions & guidelines

Entity requirements

The overarching criteria for relief from AFAD or LTFS were not substantially altered, although there are some differences. As was the case with the previous regime for ex gratia relief, the requirements below must be strictly satisfied for the exemption to apply (although the 'Australian-based' criteria necessarily involves a somewhat subjective determination).

Australian-based

Previously, this criterion involved consideration of a range of non-exhaustive factors, which together support the conclusion that the entity is Australian-based. In the new regime, this criterion now requires strict compliance with the following requirements:

• the entity has a head office or principal place of business in Australia;
• the entity has significant management staff and office presence in Australia;
• the entity has employees who are Australian citizens or permanent residents;
• the entity carries on business in Australia; and
• decisions about the entity's business and operations in Australia are primarily made by the entity's management or employees in Australia.

Whether an entity primarily contracts for services and materials of Australian suppliers and contractors is no longer part of this test.

Foreign Investment Review Board compliance

The entity must remain compliant with any requirements set out by the Foreign Investment Review Board, as was the case previously.

Regulatory compliance

The entity must remain compliant with any legal and regulatory requirements, including the Corporations Act 2001 and any relevant Queensland revenue laws, and ensure any previous non-compliance has been addressed. There is now no express reference to whether the entity has any outstanding liabilities (tax or otherwise) under those laws.

Use of Australian goods, services and personnel

There is no longer a requirement that an entity primarily employs or contracts for services and materials of Australian building suppliers and contractors to engage in the development.

Development Requirements

The following criteria replace the 'significant development' and 'significant developer' tests relevant to ex gratia relief from AFAD.

Large developer

An entity or its relevant corporate group is a large developer if it develops a minimum of 20 residential lots in a relevant 12-month period, whereas previously the requirement was 50 lots. In determining whether this test is satisfied, it remains permissible to average the number of developed lots for up to 5 consecutive years. For LTFS, the large developer test must be satisfied in the year for which the exemption is being sought.

Qualifying development (AFAD only)

A qualifying development is one where the relevant land is acquired for the purposes of undertaking a primarily residential development or re-development of at least 20 residential lots. As the development must be primarily residential, there may be challenges in obtaining relief in relation to mixed use developments.

Exception to large developer / qualifying development criteria

The Commissioner may permit an exception to the 'large developer' or 'qualifying development' criteria if:

• the land is a declared priority development area; or
• the land is part of a declared coordinated project; or
• the development or re-development is in a non-metropolitan area, having regard to a range of factors including the impacts of the development for the area.

Nominees and custodians

Usefully, the GEN Ruling provides that nominees and custodians appointed for regulatory compliance purposes will be looked through, and eligibility will be determined by reference to the activities of the next level trustee.

Corporate group tracing

The test for whether an entity is Australian-based or a 'large developer' has now been expanded to allow corporate group tracing. Under the new rules, the requirements for an entity are met if a parent or subsidiary of the entity (or any combination of these arrangements) meets the relevant requirements. A parent entity is one that has both control over 90% of the maximum votes that can be cast at a general meeting, and directly owns at least 90% of the issued shares in the subsidiary entity. The reference to "issued shares" in the Rulings suggests that for trusts it is the activities of the trustee group which is relevant; not the unitholder / beneficiary group (this approach somewhat aligns with the general corporate reconstruction relief rules which contain a corporate group concept in relation to corporations). It is unclear whether this is intentional or how this will play out in practice.

For this test to apply to corporate groups with co-owners, or joint ventures, it will require the QRO to apply the GEN Ruling holistically, with a degree of flexibility. Certain corporate structures will still struggle to find relief because, as was the case with the previous regime, it will be difficult to look beyond the activities of the land-owner itself.

Pre-approval for corporate groups

This new regime has also introduced a pre-approval process, whereby the Commissioner may grant pre-approval for an entity if the entity was previously awarded relief from AFAD / LTFS, or a different entity within same corporate group was awarded relief from AFAD / LTFS and a parent/subsidiary relationship exists at the time when the duty liability arises.

Such pre-approval continues until a notifiable event arises, which generally occurs when the entity ceases to fall within the guidelines for the relevant exemption. If such an event arises, the entity must notify the commissioner within 28 days and pay the applicable duty.

Significant contribution (LTFS only)

This exemption is intended for entities making an active contribution to the Queensland community and economy (i.e. not for passive landholders).

A significant contribution in the context of the LTFS exemption is defined as where the entity or relevant corporate group in Queensland has current, or committed future commercial activities over a 12-month period from the liability date to the requisite contribution level, meaning it employs at least 75 full-time equivalent employees, or incurs expenditure of at least $20 million annually. The addition of a forward looking component in 'committed future commercial activities' is a welcome reform.

An entity is a significant contributor if its relevant corporate group or itself has on average over 5 consecutive financial years made a significant contribution.

For commercial activities in non-metropolitan areas or certain industries, the Commissioner may deem an entity as a significant contributor or having made a significant contribution, having regard to factors such as the scale of commercial activity, nature of the area or industry, and the contribution that is made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.