The Queensland Court of Appeal delivered a decision on 6 September 2016 that will create shock waves for tenants.
From 1 January 1992 until 2009, landlords could not recover land tax from tenants even if the lease said a landlord could do so. The law changed in 2009 to allow landlords to recover land tax from tenants (excluding retail and residential) under new leases but not under pre-existing leases. A pre-existing lease included a lease created by exercise of an option in a pre-existing lease. For example, in 2008 a 5 year lease is entered into with an option for a further 5 year term. The original 5 year term and the 5 year option are both pre-existing leases and the landlord could not recover land tax under the lease.
In 2010, new land tax laws were introduced. It has been accepted until now that the new laws did not change things. That is, land tax could be recovered under new leases but not under pre-existing leases.
The Court of Appeal has determined that the 2010 laws also removed the prohibition on recovering land tax under pre-existing leases! It may be possible for landlords to recover land tax from tenants under pre-existing leases as far back as 1 July 2010! Could this also include pre-existing leases that have since ended? It might depend on the wording of the lease.
The Court of Appeal decision has been anticipated since last year when the Supreme Court reached the same conclusion.
It remains to be seen if the Queensland Parliament will pass new laws in response to the Court of Appeal’s decision.
– Les Power, Accredited Specialist (Commercial Litigation), Legal Practice Director, Wilson Lawyers
Important Notice: This publication is provided as general information only and should not be considered or relied upon as legal advice. The law is complex and you should always obtain specific legal advice about your circumstances from a qualified legal practitioner. If you require legal advice, please contact our office to see how we can help.