Decision Alert: Queensland Court of Appeal finds corporate reconstruction relief not available where transferor and transferee were not group companies when shares first came into group ownership

Introduction

On 29 May 2026, the Queensland Court of Appeal handed down its decision in Commissioner of State Revenue v Special Situations Investing Group III, Inc [2026] QCA 98, allowing the Commissioner's appeal against the decision of Bradley J in Special Situations Investing Group III, Inc v Commissioner of State Revenue [2025] QSC 345. 

The decision related to whether the exemption from landholder duty for corporate reconstructions set out s 409(2) of the Duties Act 2001 (Qld) (Duties Act) (Exemption) applied to two transfers of shares in GS Asian Venture (Delaware) LLC (GS Venture) from GSSG Holdings LLC (GS Holdings) to the respondent (Transfers).

The Court of Appeal found that the transferor and transferee (i.e. GS Holdings and the respondent) were not group companies before GS Holdings first owned the relevant shares in GS Venture (as required by s 407(1)(a)(i)), and as such the shares were not ‘group property’ for the purposes of s 406(2)(d) of the Duties Act. As a result, the exemption did not apply and landholder duty was payable on each of the Transfers.

The case is important as:

• it clarifies the meaning of ‘group property’ for the purposes of the corporate reconstruction exemption. For property to be ‘group property,’ the transferor and the transferee must have been group companies before the property, or an interest of at least 90% in the property, was first owned by the transferor or any group company. 
• in the Court’s view, there is a singular point in time at which property is ‘first owned’ by the corporate group; if that point in time pre-dates the entry of either the transferor or transferee into the corporate group, relief may not be available notwithstanding that it may appear to be a relatively standard intra-group transfer of property to which the legislative scheme appears intended to apply.
• it is a practical reminder that, in any intra-group transfer of property, the full ownership history of the relevant property must be carefully considered. Where a new intermediate holding entity is created or acquired after the property first came into group ownership, the corporate reconstruction exemption under s 409 of the Duties Act may not be available.

It should be noted that the Transfers required one of the more nuanced definitions of ‘group property’ to apply to be eligible for the Exemption; however, s 407(1) of the Duties Act prescribes several routes for satisfying the requirement that the transferred property be ‘group property’, the most common of which is that the transferor and transferee have been group companies for 3 years (per s 407(1)(f)). Where this is the case, there is no need to have regard to whether the property being transferred came within the corporate group before either the transferor or transferee.

Legislative Background

Chapter 10, Part 1 of the Duties Act provides for exemptions from both transfer duty and landholder duty where a ‘corporate reconstruction’ has occurred. Section 409(2) relevantly provides that, where a transfer of shares would be exempt from transfer duty under section 406, it is also exempt from landholder duty.

The exemption applies, per section 406(1), where a ‘corporate reconstruction’ has occurred, that is to say, the conditions in section 406(2) are fulfilled. One of those conditions, per sub-section (2)(d), is that the ‘property transferred’ (here, the shares in GS Venture) is, at the time of the transfer, ‘group property’. 

‘Group property’ is defined in section 407, with sub-section (1)(a)(i) providing that on requirement for property to be ‘group property’ is that:

‘the transferor and transferee … were group companies before the property, or an interest of at least 90% in the property, was first owned by the transferor or another group company’

‘Group companies’ are, per section 400:

• a parent company and its subsidiary; and 
• two subsidiaries of the same parent company. 

A company is the ‘parent company’ of another company if it owns at least 90% of the issued shares in the other company and has voting control over the other company (per section 401).

The Issue

It was not in dispute that each of the Transfers constituted a ‘relevant acquisition’ on which landholder duty would be payable, but for the application of the Exemption.

The sole issue in the appeal was whether the shares in GS Venture acquired by the respondent were ‘group property’ when they were acquired by the respondent. 

Factual Background

GS Venture was incorporated in February 2006 and, from that time, its shares had been held by Goldman Sachs Group, Inc (GS Group) either directly or through subsidiaries of GS Group. Neither the respondent, which became a GS Group subsidiary in March 2014, nor GS Holdings which was incorporated in February 2016, was a group company in 2006 when the shares were first owned by a group company of GS Group. 

On 1 November 2017 and 20 November 2017 the respondent purchased 64.55% and 32.82%, respectively, of the shares in GS Ventures from GS Holdings.

Procedural Background

As each of the Transfers constituted a ‘relevant acquisition’ on which landholder duty would ordinarily be payable, the respondent applied to the appellant (Commissioner) for the Exemption in respect of each Transfer.

The Commissioner notified the respondent that the acquisitions were not eligible for the Exemption and imposed landholder duty on both acquisitions along with unpaid tax interest. The respondent objected to the assessments which was disallowed by the Commissioner. Thereafter the respondent commenced proceedings against the Commissioner in the Supreme Court of Queensland.

QSC Decision

At first instance, Bradley J found that the respondent's construction of section 407(1)(a)(i) was to be preferred, relying on the disjunctive operation of ‘or’ in the phrase ‘first owned by the transferor or another group company.’

The key features of his Honour's reasoning were as follows:

• The words ‘the transferor or’ would serve no purpose on the Commissioner's construction. On the respondent's construction, those words provided an alternative circumstance in which property was ‘brought into the group’, when the transferor itself became a group company and first owned the property.
• Accordingly, the requirement in s 407(1)(a)(i) was satisfied by reference to GS Holdings' first ownership of the shares on 1 November 2017, at which time both GS Holdings and the respondent were group companies.

Court of Appeal Decision

The Court of Appeal allowed the appeal, with Gotterson AJA delivering the reasons (Mullins P and Boddice JA agreeing).

Construction of section 407(1)(a)(i) Duties Act

The Court of Appeal found that section 407(1)(a)(i) requires that the transferor and transferee be group companies before a ‘first ownership’ of the relevant property commences. The provision contemplates a single ascertainable point in time at which the property becomes ‘first owned’ by the corporate group, and both the transferor and transferee must already be group companies at that point. 

The Court's reasoning can be summarised as follows:

• The ordinary meaning of ‘first owned by the transferor or another group company’ is that the phrase identifies whichever group company owned the property earliest, whether that be the transferor or a different group company. That single date is the point before which the transferor and transferee must already be group companies.
• The respondent's construction that there could be two alternate ‘first ownerships,’ one referable to the transferor and one to another group company, was rejected. This would require inserting the word ‘either’ into the provision, which there was no contextual support for, and would render the words ‘or another group company’ superfluous.
• The primary judge's suggestion that ‘or’ should be read as ‘and’ was also rejected as inconsistent with the text of the statute.
• The respondent's alternative reading could not be reconciled with requirement in s 407(1)(a)(ii), which contemplates continuous ownership after the single ‘first ownership’ date, whether by the transferor or another group company. On the respondent's construction, the phrase ‘or another group company’ in section 407(1)(a)(ii) would be left without practical work to do.
• The Explanatory Notes to the Duties Bill 2001 (Qld) stated that clause 407(1)(a) and (b) ‘sets out particular circumstances where property will be group property if the companies have been group companies prior to the property being owned by a group member.’ The Court of Appeal held that those words plainly referred to a single first ownership of property, specifically an ownership that commences when the property is first owned by ‘a group member’, meaning any group company.

As GS Holdings and the respondent were not group companies before the shares in GS Venture were first owned by a group company (being GS Group from 2006), the requirement in section 407(1)(a)(i) was not satisfied. As such the shares were not ‘group property’ and the corporate reconstruction exemption to landholder duty in section 409 Duties Act was unavailable.

The Court of Appeal allowed the appeal and affirmed the Commissioner's disallowance of the respondent's objections to the assessments of landholder duty, with costs following the event.