Developer Guide: Queensland’s AFAD & Land Tax Foreign Surcharge Exemption for Residential Land17 min read

Introduction

On 15 December 2025, the Queensland Government introduced a new administrative arrangement for foreign-controlled property developers, replacing the previous discretionary relief process for surcharges on residential land. This reformed tax regime affects the Additional Foreign Acquirer Duty (AFAD) under the Duties Act 2001 (Qld) and the Land Tax Foreign Surcharge (LTFS) under the Land Tax Act 2010 (Qld), aiming to increase housing supply and provide greater certainty for foreign investment.

This guide explains the key changes to the exemption framework for developers in Queensland. It covers the new eligibility criteria, the application process, and the ongoing compliance obligations that foreign-controlled entities must meet to qualify for relief from these surcharges.

Interactive Tool: See If You Qualify for Foreign Surcharge & AFAD Exemptions

Queensland’s New Foreign Surcharge Relief Framework

What Are the AFAD & Land Tax Foreign Surcharge

These surcharges represent an extra tax liability on top of standard transfer duty and land tax rates. Specifically, they operate as follows:

• Additional Foreign Acquirer Duty (AFAD): an extra amount of transfer duty imposed on foreign buyers of residential land in Queensland under the Duties Act; and
• Land Tax Foreign Surcharge (LTFS): an additional rate of land tax applied to foreign companies and trustees of foreign trusts that own land in the state, as outlined in the Land Tax Act.

The Shift from Ex Gratia Relief to a New Administrative Arrangement

On 15 December 2025, the Queensland Government reformed its approach to foreign surcharge relief. As a result, the previous system, which involved applying for discretionary ex gratia (goodwill) payments on a case-by-case basis, was replaced.

In its place, a new framework was established under Public Ruling GEN012.1, titled “Administrative arrangement—exemption from AFAD and land tax foreign surcharge for residential land developers”. Ultimately, this change created a more structured and predictable exemption process for eligible developers, moving away from the uncertainty of the former discretionary system.

Goals of the QLD Government Reforms

The Queensland Government introduced these reforms with several key objectives aimed at stimulating the state’s property sector and economy. The primary goals were to increase the supply of new housing and provide greater certainty for investors considering projects in Queensland.

Furthermore, the government’s main aims for the new framework include:

• Slashing red tape: by streamlining the relief process for developers;
• Boosting housing supply: by encouraging more foreign investment in residential construction;
• Providing investor certainty: with clearer eligibility criteria and a new pre-approval process; and
• Strengthening Queensland’s competitiveness: as an attractive destination for foreign investment.

Key Changes for Foreign Investment & Property Developers

Reduced Dwelling Threshold for Developer Exemption

A key reform is the reduction in the minimum number of dwellings a developer must construct to be eligible for an exemption. Specifically, the threshold has been lowered from 50 to 20 residential lots.

As a result, this change makes the relief accessible to a wider range of projects, including:

• Smaller developments: such as townhouse complexes; and
• Mid-sized developments: like boutique apartment buildings that were previously ineligible.

Introduction of a Pre-Approval Process

The Queensland Government has introduced a new pre-approval process for developers. This allows an entity to apply for and secure an exemption from the Queensland Revenue Office (QRO) before acquiring land, a critical step in the site acquisition and due diligence process. Ultimately, this change provides greater certainty for foreign investment, reduces financial risk, and assists with project planning and securing finance.

Under Public Ruling GEN012.1, the Commissioner may pre-approve an entity for an exemption if:

• Previous approval: the entity has previously been approved for an AFAD or LTFS exemption; or
• Corporate group approval: another entity within the same corporate group has been approved for an exemption while it was a member of the group.

Furthermore, this pre-approval remains valid until a ‘notifiable event’ occurs that affects the developer’s eligibility.

Expanded Corporate Group Tracing Rules

The reforms have broadened the rules around corporate group tracing. This allows an entity to meet certain eligibility criteria by relying on the activities of its parent or subsidiary companies.

According to Paragraph 21 of Public Ruling GEN012.1, specific requirements can be satisfied by tracing through the corporate group, including:

• The ‘large developer’ requirement; and
• The ‘Australian-based’ requirement.

Therefore, this change acknowledges the complex corporate structures and need for expert joint venture structuring commonly used in property development.

Published Service Standards for Faster Processing

To improve transparency and provide developers with more predictable timeframes, the QRO has published new service standards for processing relief applications. These standards set clear expectations for decision-making as follows:

• 30 working days: for frequent applicants and renewals; and
• 60 working days: for new applicants.

Ultimately, these set timelines are designed to reduce delays and improve confidence for investors planning projects in Queensland.

Eligibility Requirements for an AFAD & LTFS Exemption

The Australian-Based Requirements for Your Entity

To be eligible for an exemption, your entity must be considered ‘Australian-based’. This is not a discretionary assessment but a set of strict criteria that must be met. However, under Public Ruling GEN012.1, corporate group tracing is permitted, meaning the circumstances of a parent or subsidiary company can be used to satisfy these requirements.

An entity must satisfy all of the following conditions outlined in Paragraph 16 of Public Ruling GEN012.1:

• Head Office: The entity must have its head office or principal place of business located in Australia.
• Local Presence: There must be a significant management staff and office presence within Australia.
• Australian Employment: The entity must employ Australian citizens or permanent residents.
• Business Operations: It must carry on business in Australia.
• Decision-Making: Key decisions regarding the entity’s Australian business and operations must be made primarily by management or employees located in Australia.

Compliance with FIRB & Other Regulatory Rules

Your entity must demonstrate a history of compliance with Australian laws. This includes satisfying all requirements from the Foreign Investment Review Board (FIRB) related to the land for which an exemption is sought. Furthermore, according to Paragraph 18 of Public Ruling GEN012.1, any past non-compliance issues with FIRB must have been addressed.

Paragraph 19 of the ruling also specifies that the entity must be compliant with other applicable legal and regulatory frameworks. This includes the Corporations Act 2001 (Cth) and Queensland’s revenue laws. In addition, if corporate group tracing is used to meet other eligibility criteria, this compliance obligation extends to all relevant entities within the corporate group.

Qualifying as a Large Developer or for a Qualifying Development

A central requirement for obtaining an exemption is meeting specific development thresholds. An entity can satisfy this by being classified as either a ‘large developer’ or by undertaking a ‘qualifying development’. The criteria for each are as follows:

• Large Developer: An entity or its corporate group is considered a large developer if it develops or redevelops 20 or more residential lots in Queensland within a 12-month period. Furthermore, Paragraph 7(h) of Public Ruling GEN012.1 allows for development activity to be averaged over a period of up to five consecutive years to meet this threshold.
• Qualifying Development: This test applies specifically to the AFAD exemption. It is met if the acquired land is intended for a development or redevelopment of 20 or more residential lots and the project is primarily residential in nature.

Under Paragraphs 24 and 25 of Public Ruling GEN012.1, the Commissioner may approve an exemption for a project with fewer than 20 lots. Ultimately, this can occur after considering its local economic and social benefits, provided the development is located in or is part of:

• a non-metropolitan area;
• a priority development area; or
• a declared coordinated project.

The Application Process & Your Ongoing Obligations as a Developer

How to Apply for the Exemption or Pre-Approval

To apply for an exemption from the Additional Foreign Acquirer Duty (AFAD) or Land Tax Foreign Surcharge (LTFS), your entity must submit an application in the approved form. Furthermore, under Paragraph 26 of Public Ruling GEN012.1, this application must be supported by all documents and information the Commissioner requires to make a decision.

This formal application process also applies to developers seeking pre-approval. Paragraphs 27 and 29 of Public Ruling GEN012.1 specify that an entity can apply for pre-approval for both AFAD and LTFS exemptions, which ultimately provides greater certainty before land acquisition.

The Duty to Report Notifiable Events

Once an exemption is approved, your entity has an ongoing legal duty to report any changes that could affect your eligibility. Under Paragraphs 31 and 33 of Public Ruling GEN012.1, you must notify the Queensland Revenue Office (QRO) of a ‘notifiable event’ within 28 days of it occurring.

A notifiable event is defined in Paragraphs 7(i) and 7(j) of the ruling and includes circumstances as follows:

• Corporate group structure: A change in your structure where corporate tracing was used to gain eligibility.
• ‘Australian-based’ requirements: The entity no longer meeting these specific requirements.
• Regulatory non-compliance: Non-compliance with Foreign Investment Review Board (FIRB) conditions or other regulatory requirements.
• Change in land use: The land no longer being used for the intended residential development.
• Premature sale or transfer: The land being sold or transferred before the development of at least 20 residential lots is complete.

Failing to report a notifiable event can have serious consequences. As a result, the Commissioner may reassess your liability for the full amount of AFAD or LTFS as if the exemption never applied. In addition, you may also be required to pay penalty tax and unpaid tax interest.

How GRM Law Can Assist Your Development Project

Interpreting the New Rules for Your Project

The new administrative arrangement for foreign surcharge exemptions involves multiple public rulings and complex eligibility criteria. As a result, we can provide tailored advice to help you understand how these rules apply to your specific development project.

Furthermore, our team assists developers in structuring projects and ownership arrangements to meet the exemption requirements. This support is particularly valuable for complex setups, including:

• Joint ventures: Ensuring collaborative projects align with the new rules.
• Complex corporate groups: Navigating the eligibility criteria across multiple entities.

Assisting with Pre-Approval Applications & Joint Venture Agreements

Our property development lawyers can manage the practical aspects of securing an exemption for your project. To achieve this, we provide support in key areas, as follows:

• Pre-approval applications: Preparing and lodging submissions with the Queensland Revenue Office (QRO), which helps secure relief before you acquire the land.
• Joint venture agreements: Advising on updates with foreign partners to ensure they align with the new legal and tax implications of the reformed surcharge framework.

Conclusion

Queensland’s new administrative arrangement, effective from 15 December 2025, replaces the former discretionary relief process for foreign developer surcharges with a more structured exemption framework. This reformed tax regime introduces clearer eligibility criteria, a pre-approval process, and reduced development thresholds to increase housing supply and provide greater certainty for foreign investment.

To understand how these complex reforms affect your project, contact our property development lawyers at GRM Law for tailored advice. Our team can assist with pre-approval applications and help structure your joint venture agreements to ensure compliance with the new framework.

Frequently Asked Questions