QLD Foreign Tax Reforms: Merry Xmas for Queensland Developers
23/12/2025
The Queensland Government has announced sweeping changes to its foreign tax regime as part of the 2025–26 Mid-Year Fiscal and Economic Review (MYFER). These reforms aim to reduce barriers for Australian-based developers and encourage foreign investment into Queensland’s property sector.
Queensland introduced the Additional Foreign Acquirer Duty (AFAD) in 2016 and the Foreign Land Tax Surcharge (FLTS) in 2019 to curb speculative foreign acquisitions. While these measures were designed to protect local buyers, they inadvertently captured Australian developers using international funding, creating a prohibitive tax environment that delayed projects and discouraged investment.
Since 2016, twelve new or increased property taxes have been introduced, impacting Queensland’s competitiveness. The latest reforms aim to address these issues by reducing compliance barriers, clarifying eligibility criteria, and introducing faster approval processes, signalling a shift towards a more investment-friendly framework.
Key changes announced
Dwelling threshold reduced
One of the most significant changes is the reduction of the dwelling threshold for relief eligibility from 50 dwellings to 20 dwellings. Previously, only large-scale residential projects could access AFAD and FLTS relief, leaving mid-sized developments exposed to additional costs.
By lowering the threshold, the government has opened the door for smaller projects, such as townhouse complexes and boutique apartment developments, to qualify for relief. This change is expected to stimulate housing supply and encourage more diverse development across Queensland.
Pre-approval process
The introduction of a pre-approval process marks a major improvement in how relief is administered. Under the old system, developers could only apply for relief after acquiring land, creating uncertainty and financial risk. The new process allows developers to secure approval before acquisition, giving them confidence to proceed with transactions and improving access to finance. This proactive approach reduces risk and supports better project planning.
Published service standards
To complement the pre-approval process, the Queensland Revenue Office (QRO) has introduced published service standards for processing applications. Frequent applicants and renewals will be processed within 30 working days, while new applicants will receive decisions within 60 working days. These timelines provide transparency and predictability, addressing long-standing concerns about delays and improving investor confidence.
Broader recognition of group entities
The reforms also broaden eligibility by recognising the activity of the relevant corporate group of which the entity is a group entity in determining if the entity has made a significant contribution or is a significant contributor. Many projects involve joint ventures or complex corporate arrangements, and under the new rules, these structures will be considered when determining if the exemption criteria is satisfied.
Five year averaged significant contributor test
For landholders seeking relief from the FLTS, a new five-year averaged significant contributor test has been introduced. This test ensures that entities demonstrating sustained economic contribution to Queensland can access relief, rewarding long-term investment rather than short-term activity. It encourages stability and ongoing engagement with the state’s economy.
Under this administrative arrangement, a significant contribution means that an entity (or relevant corporate group) has:
- Current commercial activities, or committed future commercial activities over a 12-month period from the liability date, at the requisite contribution level or
- Commercial activities approved by the Commissioner.
In this context, requisite contribution level means employing 75 or more full-time equivalent employees in Queensland (excluding labour hire or contractors) or incurring expenditure in Queensland of more than $20 million annually (comprising Queensland payroll tax and land tax liabilities, Queensland goods and services and wages paid to Queensland residents).
In relation to commercial activities approved by the Commissioner, the Commissioner will have regard to:
- the commercial activity in the context of population size, demographics, and industry maturity in the area
- the nature of the area and/or industry
- the contribution the activity makes to the area and/or industry (for example, whether the entity is a major employer in the area or whether the industry would exist without the presence of the entity) and
- any other relevant factors.
Clearer criteria and transitional arrangements
Finally, the reforms provide clearer eligibility criteria and transitional arrangements for entities already receiving relief. This removes ambiguity and ensures continuity for ongoing projects, reducing compliance risk and supporting developers during the transition to the new framework.
Rulings
To implement these reforms, the QRO has issued the following updated rulings:
- Public Ruling GEN012.1 Administrative arrangement—exemption from AFAD and land tax foreign surcharge for residential land developers
- Public Ruling LTA000.6.1 Administrative arrangement—exemption from land tax foreign surcharge for landholders undertaking commercial activities that make a significant contribution
- Public Ruling DA000.15.5 Additional foreign acquirer duty—ex gratia for significant development for liabilities arising before 15 December 2025
- Public Ruling LTA000.4.4 Guidelines for ex gratia relief from the land tax foreign surcharge for liabilities arising before 30 June 2026
How SW can help
Navigating these new rules can be complex, especially with multiple rulings and transitional arrangements.
We assist developers and investors by:
- Providing tailored advice on eligibility under the new AFAD and FLTS relief framework.
- Preparing and lodging pre-approval applications with QRO to secure relief before acquisition.
- Structuring projects and ownership arrangements to maximise compliance and minimise tax exposure.
