Client Update: Changes to duty on exploration permits in Queensland
17 January 2012
In brief: The Queensland Government has announced stamp duty changes that have the potential to impact significantly on any transactions that directly or indirectly deal with exploration permits or authorities to prospect. Partner Katrina Parkyn (view CV) reports on the changes, which reverse the previous rules whereby these transfers were not dutiable.
Historically, transfers of prospecting and exploration permits (exploration permits) and authorities to prospect (ATPs) have been exempt from transfer duty in Queensland, and have not been counted as land for the purposes of landholder duty (or, before 1 July 2011, when a land-rich duty regime was in operation).
On 13 January 2012, the Queensland Government announced that transfer duty will apply to the direct or indirect transfer of exploration permits and ATPs. It is expected that this change will be enacted by amending the definitions of 'land' and 'statutory licence' in the Duties Act 2001 (Qld) to specifically to include exploration permits and ATPs.1
This means that transfers of exploration permits and ATPs, or a part interest in them, will now attract duty in Queensland at transfer duty rates (up to 5.25 per cent).
The changes apply with effect from 10.30am on 13 January 2012, and apply for both transfer duty and landholder duty purposes.
Although legislation to enact the changes has not yet been introduced into Parliament, the Queensland Government has announced that:
- for transfer duty purposes, the changes will apply to agreements to transfer, and transfers of, exploration permits and ATPs made, or entered into, at or after 10.30am on 13 January 2012;
- where an agreement for the transfer of an exploration permit or ATP was entered into before 10.30am on 13 January 2012, a subsequent transfer of the relevant permit pursuant to the earlier agreement will not be liable to duty (ie, the changes will not apply to the transfer); and
- for landholder duty purposes, where a 'relevant acquisition' (which is the trigger for landholder duty in Queensland) is made on or after 10.30am on 13 January 2012, any exploration permits and ATPs held by the target entity (directly or indirectly, through any subsidiaries) will be counted as part of the target entity's landholdings and will be taken into account for landholder duty purposes.2
These changes, which represent a significant change to the stamp duty treatment of exploration permits and authorities to prospect that has prevailed in Queensland for many years, have the potential to impact significantly on the stamp duty treatment of transactions involving mining interests. This is especially so when the changes are considered in combination with the changes to Queensland's landholder duty rules, which took effect on 1 July 2011.
Parties who are involved in, or contemplating a transaction, involving the acquisition of an exploration permit or ATP, or the acquisition of shares in a company that owns an interest in an exploration permit or ATP, may wish to examine the impact of these changes on their transaction.
If you require any further information or assistance on this matter please feel free to contact us.
- At present, exploration permits and ATPs are specifically excluded from the definitions of land and statutory licence.
- The time at which a relevant acquisition is made is determined by specific timing rules in the Duties Act but, generally, it will be the time at which an agreement to acquire interest that gives rise to a relevant acquisition is made (or if there is no agreement, the time at which the interest is acquired).
- Katrina ParkynPartner,
Ph: +61 7 3334 3323
- Michael PerezPartner,
Ph: +61 3 9613 8500
- Adrian ChekPartner,
Ph: +61 2 9230 4800