The High Court of Australia has delivered a significant decision affecting foreign property owners, state revenue authorities, and advisers navigating cross-border tax issues.
On 15 October 2025, the Court unanimously upheld the constitutional validity of the foreign owner land tax surcharges imposed in Queensland and Victoria, resolving long-running uncertainty regarding the interaction between state legislation and international tax treaties.
The ruling clarifies the extent to which international tax agreements limit state taxing powers — and confirms states retain the ability to impose additional surcharges on foreign individuals and entities holding land in Australia.
Background: The Issue Before the High Court
The matters of G Global and Stott centred on whether:
- State foreign land tax surcharges conflicted with international tax agreements; and
- Whether the 2024 amendment to section 5(1) of the International Tax Agreements Act 1953 (Cth) — designed to close the loophole relying on treaty protections — was constitutionally valid.
Prior to the amendment, some taxpayers had argued that double tax treaties prevented the application of state foreign surcharges to individuals or companies from treaty partner countries.
The Commonwealth responded by amending section 5(1) to clarify and retroactively confirm that tax treaty provisions do not override state-based surcharges.
These matters were brought before the High Court to determine whether that amendment was constitutionally sound.
The High Court’s Findings
The High Court held that:
- The 2024 amendment to section 5(1) of the International Tax Agreements Act was valid and effective.
- The amendment successfully removed the inconsistency that had previously appeared between
• international tax agreement provisions, and
• the foreign land tax surcharge rules in
– Land Tax Act 2010 (Qld) and
– Land Tax Act 2005 (Vic). - The amendment operated retrospectively, meaning the foreign owner surcharges remained applicable despite historical treaty-based challenges.
In essence, the Court confirmed that the Commonwealth was within its powers to legislate to ensure tax treaties do not restrict state governments from imposing foreign surcharges.
What This Means for Foreign Property Owners
The High Court’s confirmation ensures:
- Foreign owner land tax surcharges remain fully enforceable in Queensland and Victoria.
- Treaty relief cannot be used to avoid or reduce these surcharges.
- Past attempts to dispute the surcharges on treaty grounds are now effectively closed.
Foreign individuals and entities holding residential or commercial land in these states should expect ongoing application of:
- Victorian Absentee Owner Surcharge (AOS)
- Queensland Absentee and foreign land tax surcharges
- Any additional compliance and notification requirements
This decision may also influence tax policy approaches in NSW, WA, and other states reviewing their own foreign surcharge frameworks.
Why This Decision Matters for Businesses and Advisers
The ruling has broad implications for:
Tax practitioners & advisers
Clear guidance on the intersection of treaties and state tax powers.
Developers & investors
Greater certainty in cost modelling, especially for foreign-backed projects.
Multinational property groups
Need to confirm classification, surcharge obligations, and past positions.
Wealth managers & estate planners
Clarity when structuring cross-border property ownership.
How BOA & Co. Chartered Accountants Can Assist
Our Sydney-based team supports clients with:
- Land tax and foreign surcharge assessments
- Cross-border tax advisory
- Property ownership structuring
- Reviewing past positions affected by the High Court ruling
- Strategic planning for foreign-owned property entities
We help ensure compliance while optimising tax outcomes under the updated legal framework.
The Bottom Line
The High Court’s unanimous decision confirms that state land tax foreign surcharges are constitutionally valid, and that last year’s federal amendment effectively resolves any conflict with international tax treaties.
Foreign investors should review their property holdings and ensure they fully understand ongoing surcharge obligations.
📞 Contact BOA & Co. Chartered Accountants for tailored advice on land tax, foreign surcharges, and cross-border property issues.
📧 [email protected]
🌐 www.boanco.com.au
📍 Sydney, NSW
Smart structure. Sustainable growth. Strategic tax outcomes.