The document summarizes recent changes to property taxes in Queensland's 2019-2020 state budget that are aimed to increase tax revenue but may undermine the state's competitiveness. Specifically: 1. Land tax rates were increased by 0.25-0.75% for commercial landholdings over $5 million. 2. The absentee land tax surcharge was increased from 1.5% to 2% for foreign owners who don't reside in Australia. 3. A new 2% foreign surcharge on land tax was introduced for foreign companies and trusts owning land valued over $350,000. However, industry groups warn that nine increased property taxes since 2016 are cooling investment in Queensland and impacting

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28 June 2019
Property Developments
Queensland State Budget 2019-2020
Are more property taxes ‘Trad’ing long-term competitiveness for short-term tax revenue?
Premier Palaszczuk and Treasurer Trad tabled in State
Parliament the Queensland State Budget 2019-2020
(Budget) on Tuesday, 13 June 2019.
The following property tax measures are included in the
Budget and Revenue and Other Legislation Amendment
Act 2019 (Qld) (Act) (commencing from 30 June 2019):
1. an increase of 0.25% to land tax for all property
landholdings of more than $5 million in Queensland;
2. an increase of 0.5% in the absentee surcharge; and
3. a new land tax foreign surcharge of 2%.
The tax revenue from these increases is forecasted at
$778 million over four years, but it raises the question –
at what cost to competitiveness for Queensland?
Budget
1. Land Tax (Uppermost Thresholds)
The rates will increase by 0.25% –
▪ 2% → 2.25% for companies and trustees with
landholdings of more than $5 million but less
than or equal to $10 million; and
▪ 2.5% → 2.75% for companies and trustees with
landholdings of more than $10 million.
2. Absentee Land Tax Surcharge
The absentee surcharge – which applies to foreign
individuals who own land and do not ordinarily reside in
Australia – will increase from 1.5% to 2%.
Note: Australian citizens and permanent residents
holding permanent visas living, working or travelling
overseas for an extended period will no longer be
assessed as absentees / will not have to pay the
absentee surcharge from the 2019/20 Financial Year.
3. Land Tax Foreign Surcharge
A new foreign surcharge of 2% will apply to foreign
companies and trustees of foreign trusts for that portion
of the taxable value of the land that is equal to or greater
than $350,000.
Competitiveness v Tax Revenue
Queensland’s three-year trend of increasing property
taxes may be contributing to a cooling effect on intra-state,
inter-state and / or foreign investment in Queensland.
Many are questioning whether such underinvestment is
offset by the tax revenue forecasted in the Budget.
In its article published on 11 June 2019, the Property
Council of Australia (PCA) highlighted that:
▪ nine new or increased property taxes have been
announced since October 2016, which is a trend that
disincentivises investment in Queensland;
▪ property taxes stifle job-generating investment
from offshore players in key sectors like tourism for
Queensland; and
▪ the land tax thresholds in Queensland are not fully
aligned with New South Wales and Victoria, which
impacts the competitiveness of Queensland.
Additionally, the PCA recently wrote to Treasurer Trad on
27 June 2019 seeking her urgent intervention in the
development of ex gratia relief guidelines, which are
intended to be finalised by the Government and delivered
with the land tax assessment notices in mid-July 2019.
Takeaways
It remains to be seen whether the property tax measures
announced in the Budget and set out in the Act will
produce a net benefit on the economic outlook for
Queensland. Nonetheless, these taxes form part of a
broader economic strategy for Queensland.
If you have any queries relating to this article or would like
further information, please contact us on the details below.
The information contained in this update is intended as a guide only. Professional advice should be sought before
applying any of the information to particular circumstances. While every reasonable care has been taken in the
preparation of this update, MinterEllison does not accept liability for any errors it may contain.