Land Tax in Queensland Now Recoverable

On 1 July 2009, section 44A of the Land Tax Act 1915 was repealed in Queensland to allow lessors to recover the cost of land tax from lessees under commercial lease arrangements.   

The statutory prohibition with respect to leases over retail premises covered by the Retail Shop Leases Act 1994 and the Residential Tenancies Act 1994 will remain. The changes relate to commercial leasing arrangements.

The new legislation effectively:

• applies to commercial leases that come into existence and commence after 30 June 2009; and
• prohibits the recovery of land tax by lessors for all pre-existing leases including any exercise of options, assignments and transfers of pre-existing leases.

Landlords should consider revising standard lease documents to allow for the recovery of land tax in the definition of "outgoings" for leases coming into existence after 30 June 2009. Tenants should also review definition provisions in leases with respect to operating expenses that may refer to payment of "taxes" generally. This definition could mean that any existing prohibition with respect to the recovery of land tax will be removed for leases commencing after 30 June 2009.