Land rich duty

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

• the corporation was unlisted—that is, its shares were not quoted on a recognised stock exchange such as the ASX
• the corporation had 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 did not have to be a Queensland corporation. A listed corporation which was suspended from trading could also be a land rich corporation if the suspension was 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. 

A relevant acquisition could be:

• an acquisition of 50% or more of the shares in a corporation. We took 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 had already been paid on a majority acquisition).

Acquisitions could 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 took the following into account when determining if a corporation was a land rich corporation:

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

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

We disregarded the following when determining if a corporation was a land rich corporation:

• property held through subsidiaries if the direct land holdings resulted 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 was a beneficiary of the trust
• certain property such as cash and loans to associated persons.

Special rules applied in relation to co-owned land.

Valuations

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

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

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

Land rich duty was 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 paid land rich duty?

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

When and how was land rich duty paid?

The liability for land rich duty arose at the time the acquisition was made.

You needed to complete and lodge a Form D3.1—Land rich duty statement (PDF 330 K), within 30 days of making a relevant acquisition. This form should have been marked to the attention of the Complex Investigations Unit.

Penalties applied if you did not lodge this statement. Unpaid tax interest also accrued on the outstanding duty until full payment was made.