Queensland State Budget delivers record surplus of $12.3b

The Palaszczuk Government announced that the Budget would deliver a record $12.3b surplus – approximately $10b more than was predicted in the last Budget, and the highest for a State or Territory Government. 

Despite uncertainty, the Queensland economy is predicted to grow by 3 per cent in 2023-24 and 2024-25, while the unemployment rate is expected to remain at 4.25 per cent for the same period.

A net operating surplus of $12.3b is forecasted for the end of 2022-23, with total debt to increase from $102.5b this financial year to $147b across the next four years.

Construction material access constraints continue to limit the residential construction sector but are expected to ease over time allowing for normal residential construction work to commence across the State.

Revenue Measures

The State Budget features some modest changes to land tax and payroll tax. These changes are reflected in the Revenue Legislation Amendment Bill 2023, which was introduced by Treasurer Cameron Dick yesterday in the Legislative Assembly. 

Build To Rent (BTR)

To improve the affordability of rental properties across Queensland, the Government has announced a proposal for tax concessions on BTR developments. The proposal is in line with similar concessions for BTR developments in New South Wales, Victoria and more recently, Western Australia. However, a key difference in the Queensland proposal is that at least 10 per cent of the dwellings constructed must be provided at discounted rents (at least 25 per cent below market rent) to ‘eligible tenants’. 

The term ‘eligible tenant’ is defined with reference to income and asset tests. In addition, various other criteria must also be satisfied, including that the BTR development must:

• Provide at least 50 self-contained dwellings (and at least five with discounted rents).
• Be owned under a unified ownership structure and managed by a single entity.
• Be occupied or available for occupation under residential tenancy agreements, the terms of which must generally not restrict who may occupy the dwellings.

A qualifying BTR development is eligible for the following tax concessions:

• A 50 per cent reduction in the taxable value of the developed land for land tax;
• A 100 per cent reduction in the taxable value of the developed land for land tax foreign surcharge; and
• A 100 per cent discount on any additional foreign acquirer duty for developed land.

The concession is available from 1 July 2023 for a maximum of 20 years (up to 30 June 2050). Construction must be completed and suitable for occupation by no later than 30 June 2030. The concession is not automatic and must be applied for in writing to the Commissioner.

Regional Employers Payroll Tax Discount Extension

In the 2019-20 State Budget, the Government provided eligible employers a one per cent discount on the payroll tax rate. This measure was due to expire this year, but yesterday’s announcement confirmed that the discount would continue for a further seven years until 30 June 2030. Eligibility for the payroll tax discount will remain unchanged: that is, the discount is available to employers who have an ABN registered in regional Queensland and pay at least 85 per cent of taxable wages to employees located outside South-East Queensland. Treasury has estimated this initiative will support more than 3,400 regional businesses.

Apprentice and Trainee Payroll Tax Rebate Extension

Similarly, the existing 50 per cent payroll tax rebate on apprentice and trainee wages is set to continue for a further 12 months to 30 June 2024. In addition to apprentice and trainee wages generally being exempt from payroll tax, this rebate provides additional support for businesses supporting youth employment and businesses who employ trainees and apprentices.

The policy is expected to provide tax relief totalling $48.6m for Queensland businesses in 2023-24.

Medical Practice Payroll Tax Amnesty

Consistent with the announcement made earlier this year in March, the Government has offered an amnesty to qualifying medical practices otherwise liable to pay payroll tax on payments made to contracted GPs, up to 30 June 2025 and for the previous five years (i.e. 2018 to 2025). The amnesty acknowledges a potential lack of awareness of the payroll tax treatment of contractors among GPs and the need to support these practices to become compliant with the least disruption possible. 

The additional payroll tax revenue which may have been recovered in absence of the amnesty is estimated to be up to $100m per annum during the amnesty period.

Amendment to Taxation Administration Act 2001 (TAA)

In what is a more unexpected change, the Revenue Legislation Amendment Bill 2023 also includes an amendment to the TAA in respect of the refund provisions. The intention of the amendments appears to be to allow refunds only where the refund is specifically provided under the TAA. This suggests that any common law right, remedy or cause of action for a refund will be extinguished, except where a taxpayer has already exercised their rights to objection to pursue a refund by starting a legal proceeding involving that common law cause of action, right or remedy.

We are yet to see how these proposed amendments to the TAA will interact with any refund applications sought by taxpayers liable for transfer duty or land tax foreign surcharge. This matter attracted considerable attention nationally earlier this year due to the New South Wales Government’s statement that the imposition of the surcharge was inconsistent with the non-discrimination provisions of international tax treaties entered into by the Commonwealth Government with New Zealand, Finland, Germany, South Africa, India, Japan, Norway and Switzerland. The New South Wales Government is the only jurisdiction thus far to have offered refunds of the surcharge to eligible foreign taxpayers.

If you wish to discuss the Queensland Budget announcements, please reach out to a Grant Thornton Partner today.