Businesses leasing industrial premises, commercial offices and certain types of retail spaces may be forced to cough up land tax, under potential amendments to Queensland legislation.

Hickey Lawyers partner Joe Welch said the proposed changes would allow landlords to pass on land tax charges to tenants, providing yet another blow for businesses already under financial pressure from the economic turmoil.

The changes, proposed under the draft Land Tax and Taxation Administration Amendment Bill 2009, are likely to come into affect after June 30, 2009, and will bring Queensland in line with other states.

Mr Welch said tenants should be wary of the possibility of being passed on the tax.

“It is possible land taxes will increase in the short term, with Queensland Government revenue under pressure from forecast drops in mining and stamp duty charges,” he said.

“As such, tenants signing new commercial and industrial leases after June 30, 2009, should be aware of the fact their landlord may be able to negotiate who will pay the tax and, therefore, will more than likely seek to pass on the charge.

“Under the changes, landlords would be able to include land tax in the definition of outgoings for leases.”

Mr Welch said under current legislation, landlords were unable to pass on land tax for leases that were entered into after January 1, 1992.

“This will still apply for leases that are in place prior to June 30, along with leases that are being renewed under an ‘option’ negotiated before the changes came into affect,” he said.

Mr Welch said the amended legislation applied to leases on industrial premises, commercial offices and certain retail premises not subject to the Retail Shop Leases Act 1994. 

Under the Retail Shop Leases Act and Residential Tenancies Act 1994, landlords will still be unable to pass on land tax to tenants.