Landlords are again prohibited from recovering Land Tax Under Commercial Leases

24 October 2017

Recent amendments to the Land Tax Act 2010 (Qld) (Land Tax Act), again bar landlords from recovering land tax from commercial tenants under commercial leases entered into between 1 January 1992 and 30 June 2009 (relevant leases) and under any renewal, assignment or transfer of these leases. 

Vikpro: the case that stirred things up!

This legislative change was a response to the Queensland Court of Appeal’s decision in Vikpro Pty Ltd v Wyuna Court Pty Ltd ATF Wyuna Court Unit Trust in 2016  (Vikpro). Vikpro held that tenants with commercial leases entered into between 1 January 1992 and 30 June 2009, which allow the recovery of land tax by a landlord, had to pay land tax imposed from the commencement of the Land Tax Act on 30 June 2010 to their landlords. 

The reversal of the decision in Vikpro applies retrospectively from 30 June 2010 and reinstates the bar on landlords passing on land tax to their commercial tenants from 30 June 2010 under relevant leases. 

What is the effect of these changes?

The changes have different effects on leases depending on when a lease was entered into:

  • Lease entered into prior to 1 January 1992:
    • Can recover land tax
  • Renewal, assignment or transfer of a lease which was entered into prior to 1 January 1992:
    • Can recover land tax
  • Lease entered into from 1 January 1992 to 30 June 2009: 
    • Land tax arising before 30 June 2010: Cannot be recovered;
    • Land tax arising after 30 June 2010: Cannot be recovered but any amounts already paid by a tenant do not need to be refunded
  • Renewal, assignment or transfer of a lease which was entered into 1 January 1992 to 30 June 2009:
    • Cannot recover land tax 
  • Lease entered into after 30 June 2009:
    • Can recover land tax
In all instances land tax can only be recovered if this is allowed under the terms of the lease. 
How about Retail and Residential Tenancies?

The changes are confined to commercial tenancies and do not affect retail shop and residential leases. As before, landlords continue to be prohibited from recovering land tax from retail and residential tenants.

Do these changes affect you? 

If you think these changes affect you, or if you would like to discuss the leasing of your commercial, industrial or retail property, please contact our experienced Property Law team. 

Richard Waring, Partner: (07) 3307 4545 or rwaring@shandtaylor.com.au

John Lowes, Partner: (07) 3307 4567 or jlowes@shandtaylor.com.au

Gyöngyi Kruchió, Associate: (07) 3307 4514 or gkruchio@shandtaylor.com.au
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