Four recently proposed legislative amendments will hopefully ease the regulatory and financial burden on those individuals who are centrally important to food security and growth of our nation, primary producers.
The first of the proposed legislative amendments concerns those primary producers that have some or all of their farming aggregation carried out on crown land (now known as rural leasehold land).
Currently, the Land Act 1994 (Qld) deals with rural leasehold land and the extensions of terms of leases for rural leasehold land. Under the current legislative framework, the lease renewal process can be involved and time consuming. The proposed amendment contained in the Land and Other Legislation Amendment Bill 2014 (Qld) (“the Bill”) is set to introduce the “Rolling Term Lease” in an attempt to shorten the lease renewal process and give a greater level of tenure security for lessees.
A Rolling Term Lease is defined as a lease for either:
a) Tourism purposes for land on a regulated island;
b) Agricultural, grazing or pastoral purposes for rural leasehold land where the land is more than 100 hectares; or,
c) With the Minister’s approval, agricultural, grazing or pastoral purposes for rural leasehold land where the land is less than 100 hectares.
The proposed amendment would see a primary production lessee required to submit an extension application to the Minister to have the lease extended, provided all annual rent is fully paid and there are no outstanding notices. The extension application could be made at any time within the last 20
years of the term of the lease. The lease will then be extended by a period equal to its original term. For example, if a lessee is 11 years into a 30 year lease, they could submit a rolling term extension application to the Minister and have their lease tenure certain for a further 49 years.
Clearly this amendment will not only simplify the renewal process but may assist primary producers and their financiers with investment in agriculture.
Another proposed amendment to the Land Act 1994 (Qld) concerning leasehold land relates to the removal of two restrictions. The first restriction is associated with a corporation’s ability to hold certain types of pastoral leases such as perpetual leases for grazing or agricultural purposes,
grazing homestead perpetual leases, and grazing homestead freeholding leases. The second concerns an individual’s ability to hold more than two pastoral leases if the total would equate to the individual having substantially more than two living areas. The term living area is defined the Land Act 1994 (Qld) to be the area of grazing or agricultural land that would be adequate for competent person to derive an income from to ensure a reasonable standard of living for the person’s family. In determining this, regard is given to the location, nature, development potential and distance from transport facilities/markets, of the land.
Currently corporations are, for the most part, prevented from holding grazing homestead perpetual leases and certain other types of perpetual leases for grazing and agricultural purposes. The removal of this outdated restriction should allow for more flexible asset protection, taxation and estate planning options for primary producers. It may also see an increase in investment in primary production from corporate primary producers.
Similarly, the removal of the maximum number of pastoral leases that an individual can hold will mean that primary producers will now have the ability to increase the size of their enterprise in order to grow their enterprise or remain financially viable.
The third proposed amendment to the Land Act 1994 (Qld) relates to the requirement to obtain the consent of the Governor in Counsel when transferring a freeholded lease. Currently, when a perpetual lease or freeholding lease is converted to freehold, a covenant is registered against the title of the property restricting the transfer of the property to a company without the consent of the Governor in Counsel. The Land and Other Legislation Amendment Bill 2014 (Qld) proposed to remove the requirement to obtain the consent of the Governor in Counsel when transferring a freeholded lease.
This will clearly make these types of holdings more attractive to a wide range of purchasers and also significantly reduce the time and cost of a conveyance of such a property.
The fourth and final proposed amendment we would like to draw to our readers’ attention relates to the Duties Act 2001 (Qld) (“the Duties Act”). The Duties Act currently contains a transfer duty (or stamp duty) concession for business property where such property is being “gifted” from one generation of a family to the next. Currently the concession is only available where the transferors are the ancestors of the transferees (e.g. parent or grandparent of the transferee or their spouse). The Revenue Legislation Amendment Bill 2014 will alter the current position by introducing the new terminology of “Defined Relative” for business property being transferred that is used to carry on a business of primary production.
This will have the effect of expanding the traditional “ancestor requirement” of the transferor where the business carried out involves agriculture, pasturage or dairy farming.
The expanded meaning of Defined Relative includes:
a) the transferor’s spouse;
b) a parent of the transferor or the transferor’s spouse;
c) a grandparent of the transferor or the transferor’s spouse;
d) a brother, sister, nephew or niece of the transferor or the transferor’s spouse;
e) a child or grandchild of the transferor or the transferor’s spouse;
f) an aunt or uncle of the transferor or the transferor’s spouse;
g) the spouse of anyone mentioned in paragraphs (b) to (f).
It is clear then that this proposed amendment will enable a greater number of inter-generational transfers of primary production business property to access the transfer duty concession.
If you would like any further information on any of the above mentioned amendments which are on the horizon, please do not hesitate to contact one of our experienced members of staff for assistance.
