Land rich duty

A corporation is a land rich corporation if, at the time of the relevant acquisition, all the following applies:

• the corporation is unlisted—that is, its shares are not quoted on a recognised stock exchange such as the ASX
• the corporation has Queensland land holdings with a value of $1 million or more
• the value of all land-holdings of the corporation, wherever situated, represented 60% or more of the value of all of the corporation's property.

The corporation does not have to be a Queensland corporation. A listed corporation which is suspended from trading can also be a land rich corporation if the suspension is to avoid duty.

Example

XYZ Pty Ltd is an unlisted corporation that owns the following property: 

State	Type of property/business	Value
Queensland	Construction business (not land)	$13 million
Queensland	Retail shopping centre	$14 million
New South Wales	Retail shopping centre	$16 million
South Australia	Retail shopping centre	$  5 million
	Total	$48 million

XYZ is a land rich corporation because it has land in Queensland with a value of more than $1 million, and its land-holdings are 72% of the value of all its property. We do not take into account any liabilities when determining if a corporation is a land rich corporation. 

See Chapter 3, Part 1 of the Duties Act 2001 for more information about property held by a land rich corporation and its subsidiaries, valuations and exemptions. 

A relevant acquisition can be:

• an acquisition of 50% or more of the shares in a corporation. We take into account acquisitions by the person and related persons over a 3 year period
• a subsequent increase in the person's interest in the corporation (if land rich duty has already been paid on a majority acquisition).

Acquisitions can occur in any way, such as by transfer, allotment or variations of rights.

Example

XYZ Pty Ltd (see the previous example) has issued 40 shares. 10 equal shares are held by W, X, Y and Z individually. W, X, Y and Z are unrelated persons. All of the shares were acquired 2 years ago.

This year, B (who is X's wife) buys Z's shares for $2.25 million. B makes a majority acquisition because B and X (a related person) have acquired a total of 50% of the issued shares in the corporation within a 3 year period.

We will take the following into account when determining if a corporation is a land rich corporation:

• the value of land that is the subject of an incomplete contract for purchase or sale (subject to later adjustment if the sale does not proceed)
• indirect interests in property (including land-holdings) held through subsidiaries in which the company or subsidiary is a beneficiary.

Subsidiaries include corporate subsidiaries under the Corporations Act 2001 (Cwlth), and trusts in which the company or a subsidiary is a beneficiary.

We may disregard the following when determining if a corporation is a land rich corporation:

• property held through subsidiaries if the direct land holdings result in it being a land rich corporation in its own right
• property held on trust by the corporation or a subsidiary unless the corporation or subsidiary is a beneficiary of the trust
• certain property such as cash and loans to associated persons.

Special rules apply in relation to co-owned land.

Valuations

The value of the relevant land and other property of the corporation (and its subsidiaries if applicable) are used to determine if a corporation is a land rich corporation.

This value must be the unencumbered value of the asset for its highest and best use. Valuations obtained for commercial purposes may not be appropriate for use in determining if a corporation is a land rich corporation.

We may ask for evidence of value, such as a valuation report from a registered valuer. We may also have our own valuation done at your expense. 

Land rich duty is payable on the dutiable value of the relevant acquisition.

Dutiable value

=

value of all Queensland land-holdings of the land rich corporation (and its subsidiaries if applicable) at the time of the relevant acquisition

x

interest being acquired in the corporation

Example

B is acquiring a 50% share in XYZ Pty Ltd for $2.25 million (see previous examples).

Dutiable value	=	$14 million (value of all Queensland land-holdings)	x	50% (interest being acquired)
	=	$7 million

Land rich duty would be calculated by applying the current land rich duty rates to the dutiable value of $7 million. The price paid for the relevant acquisition is irrelevant when calculating land rich duty.

Who pays land rich duty?

The person making the relevant acquisition in the land rich corporation must pay land rich duty. If more than one person is acquiring the property (i.e. due to the aggregation of the interests of related persons), then all of the related persons are liable to pay the duty, either jointly or individually. 

When and how do I pay land rich duty?

The liability for land rich duty arises at the time the acquisition is made.

You must complete and lodge a Form OSR D3.1—Land rich duty statement (PDF 235 K), within 30 days of making a relevant acquisition. This form should be marked to the attention of the Complex Investigations Unit.

Penalties will apply if you do not lodge this statement. Unpaid tax interest will also accrue on the outstanding duty until full payment is made.