Land tax foreign surcharge—can your client obtain ex gratia relief?

As 2020/2021 land tax assessments start issuing, it is timely for practitioners to be aware of the recently commenced land tax foreign surcharge (LTFS) in Queensland and how they might be able to assist clients in obtaining ex gratia relief if eligible.

By way of background, LTFS was scheduled to commence from 1 July 2019, but was deferred 12 months as a COVID-19 relief measure. The LTFS is similar to foreign surcharges in other states, and is closely aligned to the Victorian model, which has been in place for some years.

It is a further 2% tax on land value, which can more than double the taxpayer’s existing annual land tax liability. LTFS applies to foreign or foreign-controlled landowners and applies to all taxable land in Queensland (not just residential).

Australian citizens and permanent residents are generally not subject to LTFS. However, the ownership tracing rules should be closely reviewed to determine whether a taxpayer is subject to LTFS, with particular rules applying to New Zealand citizens.

Like Victoria, the property industry has successfully argued for certain taxpayers to be exempt from the surcharge (which in Queensland, is in the form of ex gratia relief), the criteria for which was published by the Commissioner of State Revenue as Public Ruling LTA000.4.1 shortly after actual commencement on 1 July 2020.

While there are some similarities with the requirements for relief from additional foreign acquirer duty (AFAD), being the foreign duty surcharge in Queensland), exemption from AFAD does not give automatic relief from LTFS. That said, taxpayers can make applications in relation to AFAD and LTFS together using the same supporting documentation.


One of the requirements for ex gratia relief to be granted is that the landowner must be making a significant contribution to the Queensland economy and community. Notably, land held by way of passive investment is not eligible for relief.

The ex gratia relief process closely mirrors Victoria, but with some differences, mostly in the form of the substantiating material required to demonstrate eligibility. The QLS Revenue Committee, having regard to members’ experience in obtaining similar relief for clients in Victoria, recommends that any relief application be comprehensive, using as much supporting material as is reasonably practicable.

It is expected that the Office of State Revenue will be receiving a number of applications in these few months, and so it is timely to consider applying now, even before the 2020/2021 land tax assessments are received by clients.

This article was contributed by the QLS Revenue Committee. Tax lawyer Duncan Bedford is a Partner at McCullough Robertson and Chair of the committee. Steven Paterson is a Partner at Grant Thornton focusing on state taxes and national specialist tax. He is also a member of the committee.

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