MEDIA RELEASE
Budget commitment opens door to stronger investment partnerships and housing supply
Today’s budget commitment that the Queensland Government will review the guidelines that underpin the state’s prohibitive taxation settings in conjunction with industry is a crucial first step to unlocking investment in Queensland, according to the property industry’s leading peak body.
The newly reinstated Property Consultative Committee, secured earlier this year by the Property Council, will be the vehicle tasked with assessing the punitive ex-gratia guidelines that currently deter investment in Queensland. The current regime sees Australian-based developers who have delivered the communities, homes and jobs that Queenslanders rely on unfairly taxed for utilising offshore capital, through Additional Foreign Acquirer Duty (AFAD) and Foreign Land Tax Surcharge (FLTS).
The Property Council of Australia has long challenged the settings that were first introduced in 2016 as short-sighted and small-minded and have been responsible for deterring the critical patient capital Queensland needs. Today’s commitment is a welcome step in turning the “open for business” message into action and builds a foundation for meaningful investment partnerships to build and shape Queensland’s cities for the future.
“The commitment to review Queensland’s ex-gratia relief guidelines is an essential step in unlocking growth. As it stands, they are not fit for purpose, offer little certainty up front and are counterintuitive to the government’s housing and investment targets. The decision to undertake this review in partnership with industry recognises the pivotal role we play in shaping reforms that reflect the realities of project delivery and investment decisions,” said Property Council Queensland Executive Director Jess Caire.
Ms Caire cited Property Council research conducted last year, which quantified the number of homes and jobs lost as a direct result of Queensland’s tax settings.
“Our Time for a fair go report revealed that since the regime had been introduced in 2016, Queensland had missed out on 33,000 houses, while dwellings delivered through foreign investment collapsed by 84.7 per cent,” Ms Caire said.
“In addition to putting a roof over the head of Queensland families, those houses would have generated up to 38,500 Queensland jobs and almost $100 million in extra revenue through stamp duties, land tax and payroll tax.
“This is staggering and reinforces the need for the review to regain our competitive advantage. As we compete on the global stage for capital, we need to ensure these developers, who build houses, retirement living villages, apartments, purpose built student accommodation, townhouses, are welcomed into Queensland with policy settings that can turn these homes into a reality.
“A commitment to review these guidelines with industry, sends a strong message to interstate and overseas capital that Queensland is serious about being open for business. In today’s competitive environment, aligning policy settings with the narrative is essential to proving we can genuinely walk the talk.
“It is encouraging to see that, unlike in previous budgets, the property industry has not been burdened by new taxes or increases, and we applaud the Treasurer and government for this. Pleasingly we have been given a seat at the table to help drive meaningful change and we look forward to working closely with the Property Consultative Committee over coming months to release updated guidelines by December with the Mid Year Financial Economic Review, “ Ms Caire concluded.
ENDS
Media contact: Bryn Moffatt | 04217 666 13 | [email protected]
History of Additional Foreign Acquirer Duty (AFAD)
On 1 July 2016 the Queensland Government introduced a new 3 per cent surcharge on stamp duty for foreign investors purchasing residential property in Queensland. The Queensland Government then increased the surcharge in Queensland to 7 per cent on 1 July 2018. As part of the latest State Budget delivered 11th June 2024 AFAD was increased to 8 per cent.
History of Foreign Land Tax Surcharge (FLTS)
In addition, a foreign land tax surcharge of 2 per cent applies to foreign corporations and trustees of foreign trusts and was announced as part of the Queensland State Budget in June 2019 and was initially intended to take effect from 30 June 2019 but was subsequently delayed to 30 June 2020. The Surcharge generally applies to taxable land valued at $350,000 or more owned by “foreign companies”, “foreign trusts” and absentees. From July 2024, the Queensland Government increased the surcharge from 2 per cent to 3 per cent.
Trustee of a foreign trust
You are a trustee of a foreign trust if at least 50% of the trust interests are held by:
- an individual who is not an Australian citizen or permanent resident
- a foreign company
- a trustee of a foreign trust
- a related person of any of the above.
Your interest in a trust as a beneficiary is the percentage of the value of your entitlement under the trust. There are special rules for discretionary trusts where only ‘takers in default’ (i.e. people whose entitlements as beneficiaries result from the trustee not exercising their discretion) of an appointment by the trustee have a trust interest.
Foreign Trust – Your company is foreign if:
- it is incorporated outside Australia
- foreign persons or related persons of foreign persons have at least 50% controlling interest
This results in Queensland being far less competitive than States such as NSW despite the overall tax rates being comparable. Simply put, Queensland casts a wider net, capturing those companies that invest in and contribute to a better Queensland.