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[2026] QCA 12
respondent. Appeal dismissed, with costs. The original contract was ended with the parties’ consent, the replacement contract was not a resale agreement, and transfer duty was not payable on the transaction...
The seller asked to cancel its contract with FKG01 and replace it with a contract with a related company. The new buyer paid $50,000 less because the parties had agreed that the amount paid by the former tenant in lieu of make-good work would benefit the buyer of the property. The Court of Appeal held that this arrangement did not give FKG01 a profit from the replacement contract, and that the seller’s indemnities merely protected FKG01 from loss. The replacement contract was therefore not a resale agreement under s 115, and the duty paid on the original contract was not payable. The Commissioner’s appeal was dismissed with costs.
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2,791 words · generated 08/10/2026
This appeal concerned Queensland’s cancelled-agreement exemption from transfer duty in s 115 of the Duties Act 2001 (Qld). The dispute was not whether there had been a replacement sale of the same property. There plainly was. The central question was whether that replacement contract was a “resale agreement” under s 115(2), which would prevent the exemption applying to the original contract.
1 cited instrument linked from this judgment.
Jeteld owned a commercial property at 122 Margaret Street, Toowoomba. On 25 May 2022, it contracted to sell the property to FKG01 for $10 million. Settlement was initially due on 15 June 2022. One of the two leases affecting the property was a Suncorp lease, due to expire on 19 June 2022. The contract’s standard conditions provided for assignment to the buyer of the benefit of conditions in the leases, and Suncorp’s lease required it to keep the premises in good repair ([2]).
Before settlement, FKG01, with Jeteld’s approval, negotiated with Suncorp for it to pay $50,000 plus GST instead of carrying out make-good work. Jeteld invoiced Suncorp for the amount, and Suncorp paid Jeteld ([3]). Jeteld and FKG01 agreed that the $50,000 would be accounted for in FKG01’s favour. The Court described the agreement as a reduction in the selling price, reflecting that FKG01 would have been the lessor and entitled to the payment if the original contract had settled on the intended date ([4]).
FKG01 paid $555,525 in transfer duty on the original contract on 14 June 2022 ([5]). Jeteld then sought a cancellation and replacement because of tax advantages to it if the sale contract was entered into on or after 1 July 2022. FKG01 agreed to that request ([6]). The parties considered whether the $50,000 should appear as a lower purchase price or as an adjustment at settlement. The eventual arrangement placed the price at $10 million, with special condition 13 reducing the amount payable by $50,000 ([7]–[11]).
The replacement buyer, 122 Margaret Street Pty Ltd, was a related person of FKG01 for the purposes of s 61 of the Duties Act. On 31 August 2022, Jeteld, FKG01 and the new buyer executed the deed of rescission, and Jeteld entered the replacement contract with the new buyer. Settlement was set for 3 October 2022. Under special condition 13, the price would be reduced by $50,000, described as compensation received from Suncorp because the new sale contract was entered into after the lease had ended ([9]–[11]). Duty of $555,525 was also assessed and paid on the replacement contract ([12]).
The deed included indemnities. Jeteld agreed to indemnify FKG01 for duty potentially payable on the cancelled contract, and the deed authorised Jeteld to take steps, at its expense, to challenge a reassessment. A further clause required reimbursement to Jeteld if duty paid to FKG01 was later refunded ([13]–[14]).
FKG01 asked for a refund of the duty paid on the original contract under s 115. The Commissioner refused, reasoning that the replacement contract was a resale agreement because a financial benefit was received ([15]–[17]). The objection was disallowed on the basis that the related buyer received a financial benefit through the reduced purchase price ([18]–[21]). The primary judge allowed FKG01’s appeal. The Court of Appeal, in reasons given by Bowskill CJ and agreed to by Doyle JA and Wilson J, dismissed the Commissioner’s appeal with costs ([1], [58]–[60]).
Section 115(1)(d) provides an exemption where an agreement is ended with the parties’ consent and there is no resale agreement. Under s 115(2), an agreement is a resale agreement if the property subject to the cancelled agreement is or will be transferred under the new agreement and the original transferee or a related person receives a financial benefit, subject to the listed exclusions ([16]). The court therefore examined both the related buyer’s position and FKG01’s position.
The Commissioner argued that the primary judge went outside the grounds of objection by considering the arrangement under which Jeteld was to account to FKG01 for the Suncorp payment. The Court of Appeal rejected that argument. FKG01’s position from the outset was that the $50,000 adjustment did not constitute a disqualifying benefit because it restored the position it would have occupied had the original contract settled as intended. That argument necessarily involved the arrangement between Jeteld and FKG01 about the payment. The court said the primary judge was required to consider it, and the evidence supported the finding that an informal agreement existed ([33]–[35]).
The court also rejected the claim that FKG01 had waived reliance on s 115(2)(b)(ii). That provision was raised in the objection and notice of appeal, included in the agreed issues, and addressed in the parties’ written submissions. The primary judge also invited further submissions specifically concerning whether the price difference represented a profit for FKG01 because of the replacement contract ([36]–[39]). The procedural history therefore did not justify excluding the statutory issue from consideration.
On the $50,000 adjustment, the court distinguished between receiving money and receiving the property for a reduced price. The related buyer did not receive a separate $50,000 payment; it acquired the property for $10 million less the adjustment. The court accepted that the related buyer received an interest in the property, but held that the reduction did not establish a disqualifying benefit to FKG01 ([52]).
The central point was the statutory link between the benefit and the replacement contract. Section 115(2)(b)(ii) refers to the original transferee, FKG01, and asks whether the unencumbered value of the interest represents a profit for that transferee because of the replacement agreement. It does not refer to the original transferee or a related person for this particular profit inquiry ([53]–[55]). The arrangement for the $50,000 reflected the payment FKG01 would have received under the original arrangement if that contract had settled as envisaged. The adjustment therefore did not produce a profit for FKG01 because of the replacement contract ([52]–[56]).
The indemnity argument failed for a related reason. Jeteld had sought the cancellation. Once the related company replaced FKG01 as buyer, FKG01 received no benefit from either sale contract. The indemnity protected FKG01 from possible duty and costs arising from the cancellation, while also serving Jeteld’s interest in challenging an assessment ([43]–[44]). The court characterised the indemnity as ensuring that FKG01 did not suffer detriment, rather than improving its position through a financial benefit. Its operation left FKG01 neutral ([47]–[49]).
The court described the Commissioner’s position on the indemnities as circular: an agreement that was not otherwise a resale agreement could not become one merely because Jeteld and FKG01 arranged protection against potential duty on the cancelled contract and the costs of correcting an assessment that might prove wrong ([48]). The judgment did not decide that indemnities can never be financial benefits. Its reasoning was tied to the particular cancellation, replacement and neutralising effect of these indemnities.
The judgment applied the text of s 115 to a specific pattern: a consensually cancelled contract, a replacement sale to a related buyer, a price adjustment reflecting an amount the original buyer would have received, and an indemnity protecting that original buyer from possible duty exposure. It did not announce a general change to the law of transfer duty or provide a comprehensive definition of “financial benefit”.
The statutory framework remained as set out in s 115. A consensual cancellation is exempt only if there is no resale agreement. The court’s contribution is its application of the statutory terms to the actual arrangements before it. In particular, it treated the question of profit as requiring a connection between the original transferee’s benefit and the replacement agreement, not simply a comparison of the two stated purchase prices ([53]–[56]).
The judgment also explains the nature of an appeal under ss 69 and 70 of the Taxation Administration Act 2001 (Qld). As described at [23]–[25], the court does not simply review whether the Commissioner’s stated reasons were correct. It exercises original jurisdiction to make the decision that should have been made on the facts and law at the hearing, with the ultimate focus on whether the assessment is incorrect. The taxpayer’s appeal grounds remain limited by its objection grounds, while the Commissioner may support the assessment on another ground if the taxpayer has notice of it ([25]).
The Court of Appeal relied on earlier authorities for those procedural propositions. It referred to Wakefield v Commissioner of State Revenue for the hearing-de-novo character of the appeal, and to Federal Commissioner of Taxation v Dalco for the focus on the taxpayer’s true liability and the court’s task. It also referred to Queensland Chamber of Commerce and Industry Ltd v Commissioner of State Revenue and Commissioner of Taxation v Australia and New Zealand Savings Bank Ltd ([23]–[25] and footnotes).
The judgment discussed BP Refinery (Westernport) Pty Ltd v Shire of Hastings in rejecting the Commissioner’s characterisation of the primary judge’s reasoning. Bowskill CJ explained that the primary judge was not implying a term into the original contract in the BP Refinery sense. Properly understood, the finding was that Jeteld and FKG01 later reached an informal agreement about the $50,000 ([34]). The decision therefore does not purport to modify the general law test for implying contractual terms.
At [23], the court described the appeal as “a hearing de novo”. In plain English, the court was deciding the tax question afresh on the relevant facts and law, rather than merely checking whether the Commissioner’s reasoning had been adequately expressed.
At [24], the judgment says the ultimate question is whether “the assessment is incorrect”. This frames the task around the correct tax liability, rather than treating each objection ground as a separate final answer. The qualification at [23]–[25] is important: the taxpayer’s grounds are still limited by the objection, and the Commissioner may raise another basis for supporting an assessment if proper notice is given.
At [34], Bowskill CJ says that the finding about the $50,000 was “a later informal agreement between Jeteld and FKG01”. The practical significance is that the judge’s reasoning did not depend on implying a term into the original written contract under the test associated with BP Refinery. The court instead treated the evidence as establishing a later arrangement relevant to the parties’ positions.
At [47], the court says FKG01’s “position is rendered neutral by operation of the indemnity”. In ordinary terms, the indemnity protected FKG01 against a possible loss associated with the seller’s decision to cancel the contract. The court did not treat that protection as an additional gain in the circumstances of this case.
At [52], the court explains that the related buyer received the property for $10 million less $50,000, rather than receiving $50,000 as a separate monetary payment. The form of the transaction mattered to the court’s characterisation of what the buyer obtained.
At [55], Bowskill CJ states: “FKG01 did not receive anything ‘because of’ the replacement contract.” This is the key link in the application of s 115(2)(b)(ii). The court did not consider the lower amount paid by the related buyer sufficient, without more, to show that FKG01 made a profit because of the replacement agreement.
Finally, [57] gives the result: the original contract was ended with consent, the replacement contract was not a resale agreement, and duty was not payable on the original transaction.
The decision is most directly relevant where an original property sale is ended by consent and replaced by a new sale of the same property, particularly where the new buyer is related to the original buyer. It concerns the statutory test in s 115 of the Duties Act, rather than every form of contract cancellation or every kind of duty dispute.
The reasoning is especially fact-sensitive where the replacement buyer pays a lower amount because the transaction accounts for a payment or entitlement that the original buyer would have received if the original sale had settled as planned. Here, the $50,000 adjustment corresponded to the Suncorp payment in lieu of make-good work. The court accepted that the original parties had agreed the amount would be accounted for to FKG01, and that the replacement arrangement restored the relevant economic position ([3]–[4], [34], [52]–[56]).
The case also concerns a seller-requested cancellation accompanied by an indemnity protecting the original buyer against the consequences of that cancellation. The court considered the reason for the indemnity, the fact that FKG01 no longer acquired the property, and the indemnity’s effect of preventing detriment rather than generating a gain ([43]–[49]).
The decision should not be read as establishing that every price reduction is excluded from the resale-agreement test, or that every indemnity is irrelevant. The court accepted that a reduction might matter if it reflected a benefit outside the statutory exclusions or produced a profit for the original transferee. The primary judge’s example, quoted at [30], was a discount that operated like a kickback and caused the related buyer to pay less than market value. The Court of Appeal upheld the result on the facts before it; it did not decide every possible characterisation of a price adjustment.
The judgment is dated 6 February 2026 and the supplied text contains no later decisions discussing it. Its own treatment of earlier authorities is limited to the procedural and contractual points identified above.
For appeals under the Queensland tax administration legislation, Bowskill CJ cited Wakefield v Commissioner of State Revenue for the hearing-de-novo description and Federal Commissioner of Taxation v Dalco for the purpose of identifying the taxpayer’s true liability. Queensland Chamber of Commerce and Industry Ltd v Commissioner of State Revenue was cited in connection with the court’s task, while Commissioner of Taxation v Australia and New Zealand Savings Bank Ltd was cited alongside Dalco on the Commissioner’s ability to support an assessment on a ground not previously taken into account, provided notice is given ([23]–[25]).
BP Refinery was mentioned in the discussion of whether the primary judge had implied a term into the original contract. The Court of Appeal clarified that the primary judge’s finding was instead about a later informal agreement between Jeteld and FKG01 ([34]). The judgment does not purport to overrule or comprehensively restate any of those authorities.
The source text therefore supports describing this decision as applying the statutory resale-agreement test to a particular fact pattern, alongside established principles about the scope and purpose of tax appeals. It does not provide evidence of how later courts have applied or limited the decision.
The judgment resolves whether these particular arrangements prevented the cancelled-agreement exemption from applying. It leaves other questions dependent on the language of s 115 and different facts.
First, the decision does not provide an exhaustive definition of “financial benefit”. It concludes that the related buyer’s reduced payment for the property, in the circumstances proved, did not yield a disqualifying profit for FKG01. The judgment does not determine how the provision applies to other economic advantages, indirect payments, or arrangements that produce a demonstrable gain for the original transferee.
Second, the case does not establish how a court should assess the relevant unencumbered value in every transaction. The Commissioner argued that there was no evidence establishing that the value under the original contract was the same as under the replacement contract ([51]). The Court of Appeal upheld the primary judge’s conclusions on the evidence and reasoning before it ([56]), but did not set out a general valuation methodology.
Third, the treatment of indemnities depends on their operation and context. The court focused on the fact that Jeteld requested the cancellation, FKG01 no longer received the property, and the indemnity protected FKG01 from possible detriment ([43]–[49]). It did not decide the treatment of an indemnity that provides a separate, immediate gain or that is not connected with neutralising consequences of the cancellation.
Fourth, the court’s conclusion that the parties had a later informal agreement about the Suncorp payment was evidence-specific. The judgment refers to correspondence recording that the amount would be adjusted in the selling price and says the finding was supported by the evidence ([28], [34]). It does not determine what evidence would suffice in another dispute over an alleged informal agreement.
Finally, the decision does not address the application of s 115 to replacement arrangements involving different property, a buyer who is not related, a cancellation for reasons other than consent, or a benefit accruing to the original buyer beyond the release from contractual obligations and the specified property-interest exclusion. Those situations would require attention to the statutory text and their own facts.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on, relying on, or using this analysis, have a qualified Australian lawyer check it.
Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Commissioner of State Revenue v FKG01 Pty Ltd [2026] QCA 12
PARTIES: COMMISSIONER OF STATE REVENUE / (appellant) / v / FKG01 PTY LTD / ACN 659 474 898 / (respondent)
FILE NO/S: Appeal No 2479 of 2025 / SC No 16232 of 2023
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: Supreme Court at Brisbane – [2025] QSC 105 (Hindman J)
DELIVERED ON: 6 February 2026
DELIVERED AT: Brisbane
HEARING DATE: 23 October 2025
JUDGES: Bowskill CJ, Doyle JA, Wilson J
ORDER: The appeal is dismissed, with costs.
CATCHWORDS: TAXES AND DUTIES – STAMP DUTIES – APPEAL, CASE STATED ETC – QUEENSLAND – where the respondent (as the original buyer) entered into a contract to purchase real property for $10 million – where at the time of that original contract the property was the subject of two leases, one of which was due to expire shortly after the settlement date – where the standard conditions of the contract of sale included an assignment by the seller to the buyer of the benefit of all conditions contained in the leases – where one of the leases included a requirement for the tenant to maintain the leased premises in good repair (referred to by the parties as a “make good” obligation) – where prior to the settlement date the respondent and the seller negotiated an arrangement under which the tenant agreed to pay $50,000 in satisfaction of the make good obligation – where it was agreed between the seller and the respondent that the $50,000 would be adjusted in the selling price resulting in a reduced purchase price of $9,950,000 – where the original contract was cancelled at the request of the seller and a replacement contract was entered into with a new buyer who was a related person to the respondent, within the meaning of s 61 of the Duties Act 2001 (Qld) – where the replacement contract delayed the settlement date such that the lease expired before the settlement date rather than after – where the replacement contract included a special condition reducing the purchase price to be paid by the new buyer by $50,000 – where the seller gave indemnities in favour of the original buyer for any duty that might become payable on the cancelled contract – where transfer duty was paid on the original contract as well as the replacement contract – where there was an application to the Commissioner for the duty that was paid on the cancelled contract to be refunded – where the Commissioner refused to refund the transfer duty on the cancelled contract on the basis that the replacement contract was a “resale agreement” and an exemption from transfer duty on the cancelled contract under s 115(1)(d) of the Duties Act 2001 (Qld) did not apply – where the respondent appealed the Commissioner’s decision to the Supreme Court – where the primary judge held that the replacement contract was not a resale agreement, and therefore allowed the respondent’s appeal against the Commissioner’s decision – where the Commissioner appeals that decision on numerous grounds – whether the replacement contract constitutes a “resale agreement” for the purposes of s 115(1)(d) of the Duties Act 2001 (Qld) – whether either the $50,000 reduction in the purchase price under the special condition or the indemnities constitute a disqualifying “financial benefit” under s 115(2)(b) of the Duties Act 2001 (Qld) – whether transfer duty is payable on the transaction the subject of the original contract / Duties Act 2001 (Qld), s 115 / Taxation Administration Act 2001 (Qld), s 63, s 65, s 69, s 70, s 70A / BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; [1977] UKPCHCA 1, cited / Commissioner of Taxation v Australia and New Zealand Savings Bank Ltd (1994) 181 CLR 466; [1994] HCA 58, cited / Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614; [1990] HCA 3, cited / Queensland Chamber of Commerce and Industry Ltd v Commissioner of State Revenue [2015] QSC 77, cited / Wakefield v Commissioner of State Revenue [2019] 3 Qd R 414; [2019] QSC 85, cited
COUNSEL: H G Lakis, with M D Paterson, for the appellant / F L Harrison KC, with A J Anderson, for the respondent
SOLICITORS: Clayton Utz for the appellant / Wonderley & Hall for the respondent
Factual context
The issue arises in the following factual context. Jeteld Pty Ltd was the owner of a commercial property located at 122 Margaret Street in Toowoomba. On 25 May 2022, Jeteld entered into a contract to sell that property to the respondent, FKG01 Pty Ltd, for $10 million (the original contract). The contract was initially due to settle on 15 June 2022. At the time of that contract, the property was subject of two leases, one of which was a lease to Suncorp which was due to expire shortly after the settlement date, on 19 June 2022. The standard conditions of the contract of sale included an assignment by the seller to the buyer of the benefit of all conditions contained in the leases (clause 16.3). The Suncorp lease included a requirement for it to maintain the leased premises in good repair (clause 22, referred to by the parties as a “make good” obligation).
Prior to the settlement date, FKG01 (as buyer), with the approval of Jeteld (the seller) negotiated an arrangement with Suncorp under which, in satisfaction of Suncorp’s make good obligation, Suncorp would pay $50,000 (plus GST) and leave behind some chattels and other fixtures. This was formalised by an invoice issued from Jeteld (which was then still the lessor) to Suncorp for $50,000 (plus GST) on 15 June 2022. Suncorp subsequently paid this money to Jeteld.
It was agreed between Jeteld and FKG01 that the $50,000 “make good” contribution from Suncorp would be “adjusted in the selling price”, in FKG01’s favour, resulting in a reduced purchase price of $9,950,000. This reflected the fact that, had the contract settled on 15 June 2022, FKG01 would have been the lessor of the Suncorp lease at the time it expired and would therefore have been entitled to receive this money.
The original contract was assessed and, in anticipation of settlement the next day, FKG01 paid transfer duty of $555,525 on 14 June 2022.
Before the original contract settled, Jeteld contacted FKG01, by their respective solicitors, with a proposal for “revised contractual terms”. Jeteld wanted to rescind and replace the original contract because there were income tax advantages for Jeteld if the contract for the sale of the property was entered into on or after 1 July 2022. FKG01 agreed to that, and the parties agreed to extend the settlement date under the original contract while the revised terms were negotiated. Under the proposed replacement contract, a draft of which was provided on 17 June 2022, the purchase price was $9,950,000, reflecting the agreement reached in relation to the $50,000 payment from Suncorp. A new settlement date of 15 August 2022 was proposed.
On 24 June 2022, FKG01’s legal counsel informed Jeteld’s solicitor that:
“… it is [FKG01’s] preference that the Purchase Price remain as $10,000,000.00 and that Suncorp’s $50,000.00 make good contribution be reflected as an adjustment to be made in [FKG01’s] favour in the settlement figures.”
A further draft of the deed of rescission with the replacement contract was provided by FKG01 to Jeteld on 24 June 2022, reflecting that change. Another draft was provided by FKG01 on 29 June 2022, incorporating amendments to clause 5 of the deed of rescission (the indemnity), among other things.
In late June or early July 2022, there were discussions about “using a new purchasing entity” for the replacement contract, because this would be administratively more convenient to FKG01. The “new buyer” was to be 122 Margaret Street Pty Ltd, a “related person” of FKG01, within the meaning of s 61 of the Duties Act.
It took some time to finalise the arrangements, during which there were a number of extensions to the settlement date.
Eventually, on 31 August 2022, Jeteld (as Seller), FKG01 (as Buyer) and 122 Margaret Street (as New Buyer) executed the deed of rescission; and Jeteld (as Seller) entered into the replacement contract with 122 Margaret Street (as Buyer) (the replacement contract). The purchase price under the replacement contract was $10,000,000 and the settlement date was 3 October 2022. The provisions of the replacement contract were substantially similar to the original contract. One of the differences was that a special condition 13 was included in the replacement contract, in the following terms:
“Adjustment to the Purchase Price in favour of Buyer
In addition to any other adjustment to the Purchase Price, at settlement the Purchase Price will be reduced by an amount of $50,000, being the amount of compensation received by the Buyer [sic, Seller] from the former tenant Suncorp Corporate Services Pty Ltd in consequence of … this contract not being entered into until after the termination of the former tenant’s lease.”2
Transfer duty of the same amount ($555,525.00) was assessed as payable on the replacement contract, and was paid on 29 September 2022.
Relevantly, clause 5 of the deed of rescission provided as follows (where Contract means the original contract and New Contract means the replacement contract):
“5 Duty
5.1 Seller to Indemnify Buyer
Subject to the provisions of clause 5.3 …, 5.4 …, 5.5 and 5.6…:-
The Seller indemnifies the Buyer for any Duty payable in relation to this Deed;
In the event Duty is payable on the Contract despite this Deed and the New Contract (for example, the Commissioner of State Revenue rules, or a Court of competent jurisdiction orders, that Duty is payable on both the Contract and the Replacement Contract) then the Seller [Jeteld] further indemnifies the Buyer [FKG01] for any Duty payable in relation to the Contract;
This clause 5.1 prevails to the extent of any inconsistency with the terms of the Contract.
5.2 New Buyer to Indemnify Seller
The New Buyer indemnifies the Seller in relation to any Duty payable in relation to the Replacement Contract.
…
5.6 Power of Attorney
The Buyer irrevocably appoints:-
the Seller and the Seller’s successors and assigns; and
every director and secretary of the Seller;
severally the attorney of the Seller [sic, Buyer] with power, at the expense of the Seller at any time and from time to time … to do all acts and things to execute all documents as may, in the Seller’s opinion, be reasonably necessary or desirable or expedient to object to, appeal against or re-settle the assessment in accordance with the provisions of clause 5.5 (‘Dispute of Re-Assessment’).
5.7 Seller to be reimbursed payment
Where any payment has been made by the Seller to the Buyer under clause 5.1 (‘Seller to Indemnify Buyer’) and the Commissioner at any time ultimately reassesses the Contract on the basis that there is no Duty payable then the Buyer must following receipt of any monies from the Office of State Revenue pay an equivalent amount to the Seller.”3
The request for a refund – s 115 of the Duties Act
On 11 October 2022, FKG01 sought a refund of the duty it had paid under the original (rescinded) contract, on the basis that it was a “cancelled agreement” within the meaning of s 115 of the Duties Act.
Section 115 provides:
“115 Exemption – cancelled agreements
Transfer duty is not imposed on a dutiable transaction that is an agreement for the transfer of dutiable property (the cancelled agreement) if –
the agreement is ended because of a breach of it by a party to it; or
the agreement is ended because of non-fulfilment of a condition of it; or
the agreement is brought to an end by frustration; or
the agreement is ended with the consent of the parties to it and there is no resale agreement.
For subsection (1)(d), an agreement is a resale agreement if –
under the agreement, any of the dutiable property the subject of the cancelled agreement is or will be transferred or is agreed to be transferred; and
the transferee under the cancelled agreement or a related person of the transferee receives, or will receive, directly or indirectly a financial benefit other than –
the release of the transferee from the transferee’s obligation under the cancelled agreement; or
an interest in the dutiable property to the extent that the unencumbered value of the interest does not represent a profit for the transferee because of the resale agreement.
If, on an assessment, transfer duty has been paid on an agreement that is not liable to transfer duty because of this section, the commissioner must make a reassessment if an application is made within 6 months after the agreement is ended or within the longer period the commissioner allows.
The applicant must lodge the cancelled agreement with the application.”4
That request was refused, because the Commissioner determined that the replacement contract was a “resale agreement” for the purposes of s 115(2) “as there is a financial benefit being received”.
On 24 March 2023, Jeteld, on behalf of FKG01, lodged an objection against the refusal to refund the duty on the original contract, under ss 63 and 65 of the Taxation Administration Act 2001 (Qld). The grounds for the objection were stated as follows:
“…The decision was made on the erroneous basis that the replacement contract …was a ‘resale agreement’ for the purposes of s 115(2) of the Duties Act 2001 (Qld) because the Commissioner alleges a financial benefit was received.
That ground was and is erroneous in that there was and is no agreement under which the transferee under the cancelled agreement or a related person of the transferee receives, or will receive, directly or indirectly, a financial benefit other than:
the release of the transferee from the transferee’s obligation under the cancelled agreement;
an interest in the dutiable property to the extent that the unencumbered value of the interest does not represent a profit for the transferee because of such agreement.
Further material relevant to the objection is contained in Annexure A.”
“The intention behind the changes set out above was to place 122 Margaret in the same position as the previous buyer FKG01 would have been in had the Cancelled Agreement settled on the 15th June 2022 as originally envisaged.”
“The transferee under the Cancelled Agreement (FKG01) did not receive directly or indirectly a financial benefit other than the release of FKG01 from its obligations under the Cancelled Agreement. Amongst other things, as the Cancelled Agreement was not onerous, the cancellation of the Cancelled Agreement did not confer any such benefit on FKG01.
… 122 Margaret (as a related person of FKG01) did not directly or indirectly receive a ‘financial benefit’ other than an interest in the dutiable property in that the unencumbered value of the interest does not represent a profit for 122 Margaret because of the New Contract for the following reasons:-
The term ‘financial benefit’ (not being defined in the Duties Act 2001 or defined in any standard law dictionaries), should be confined to benefits which are financial in their nature since any wider meaning would make the word ‘financial’ otiose.
Even if the expression ‘financial benefit’ in the Duties Act 2001 is given a comparatively wider interpretation (ie to include any benefit from commercial interests or anything else of primary significance which is economic gain or easing financial burden) there is no ‘financial benefit’ within this wider interpretation for the following reasons:-There was no financial benefit arising from the purchase price remaining at $10,000,000.00.The various differences between the Cancelled Agreement and the New Contract were for the purposes of placing 122 Margaret in the same position as the previous buyer would have been in had the Cancelled Agreement settled on the 15th June 2022 as originally envisaged. More particularly:-
…
The $50,000 adjustment at settlement did not amount to a financial benefit, because the effect of the adjustment was to restore the benefit that would have been received if the sale had settled before the termination of the Suncorp lease… if the sale had settled before Suncorp had paid for its breaches, the buyer of the property would have been entitled to the benefit of any unsatisfied make good obligations under the lease, and would have been entitled to compromise with Suncorp as to the amount to which it is entitled…”
“Under the contract dated 31 August 2022, 122 Margaret Street Pty Ltd … received a financial benefit being a reduction in the purchase price, which makes the agreement a resale agreement.”
The appeal to the Supreme Court
FKG01 appealed to the Supreme Court against that decision under s 69 of the Taxation Administration Act 2001 (Qld), by filing a notice of appeal (albeit in the form of an originating application) setting out the grounds of the appeal and the facts relied on (s 70(4)).
On an appeal under s 69*,* the appellant bears the onus of proving its case (s 70A). The grounds of the appeal “are limited to the grounds of objection unless the court otherwise orders” (s 70(5)). The Court on the appeal:
“does not stand in the shoes of the Commissioner, but exercises its original jurisdiction to make such judgment as it considers ought to have been given, on the facts and the law, at the time of the hearing of the appeal. The appeal is in that sense a hearing de novo.”5
The purpose of the procedure of assessment, objection and appeal is “to ascertain the true tax liability of the taxpayer” under the relevant legislative provisions.6 In that context, since the Court’s task is to make the decision it considers ought to have been made by the Commissioner,7 although the grounds of objection limit the grounds of appeal, the ultimate question for the Court hearing the appeal is not whether the grounds have been made out, but whether the assessment is incorrect.8
The basis for the Commissioner’s decision to disallow FKG01’s objection was that the replacement contract was a “resale agreement” within the meaning of s 115(2) because the $50,000 adjustment (reduction) in the purchase price was a “financial benefit” received by 122 Margaret Street other than of a kind referred to in s 115(2)(b)(i) or (ii). It is not clear when the argument that the indemnity(ies) provided under clause 5 of the deed of rescission was also an excluding “financial benefit” first arose. The first reference to the indemnity seems to have been in [21(b)] of FKG01’s submissions below, which was then picked up in [4.15] of the Commissioner’s submissions. This does not matter, however, because although the taxpayer is limited to the grounds of their objection, the Commissioner may, on an appeal, support the assessment on a ground not previously taken into account, provided notice of that argument is given to the taxpayer.9
The decision below
The hearing of the appeal took place on 3 October 2024. On 10 April 2025, the associate to the primary judge emailed the parties, inviting further submissions on an aspect of the issue the subject of the appeal, which had not yet been addressed – namely, whether it mattered that 122 Margaret Street had paid $50,000 less for the property than FKG01 would have, because the relevant question was whether the difference represents a profit for FKG01 because of the resale agreement for the purposes of s 115(2)(b)(ii). Further written submissions were filed by the Commissioner, by FKG01, and in reply by the Commissioner. The parties were given the opportunity to say if they would like a further oral hearing. Neither of them did.
For reasons delivered on 19 May 2025, the primary judge concluded that the replacement contract was not a “resale agreement” under s 115(2), because neither FKG01 nor 122 Margaret Street received any financial benefit under the replacement contract other than (i) the release of FKG01 from its obligation under the original contract (the cancelled agreement); and (ii) an interest in the dutiable property, the unencumbered value of which did not represent a profit for FKG01 because of the replacement contract. The appeal was therefore allowed.
As to the $50,000 adjustment to the purchase price under the replacement contract, the primary judge accepted FKG01’s argument that the effect of this was simply to place 122 Margaret Street into the same position that FKG01 would have been, had the original contract settled as originally envisaged. In rejecting the Commissioner’s argument to the contrary, her Honour said:
“[76] The CSR’s submission proceeds on the basis that if the Original Contract had then proceeded to settlement (rather than being rescinded), Jeteld would have had no obligation to account to FKG01 for the payment received from Suncorp. That is, in my opinion, not a realistic proposition. Although it might not have been formally recorded anywhere, it was inevitable that Jeteld was going to have to account to FKG01 for the payment received from Suncorp. Jeteld was not at liberty, once it entered into the Original Contract, to change the leasing arrangements with Suncorp to the detriment of FKG01 – note clauses 16.3, 32.1(a) and (c), 32.2 and 32.3 of the Original Contract. The change to the Suncorp lease that did occur plainly occurred with the consent of FKG01 and that could only have been on the basis of Jeteld accounting to FKG01 for the payment once settlement occurred. All the requirements for implying a term in fact to that effect are readily satisfied.
[77] In fact, correspondence from Jeteld to its solicitor on 16 June 2022 (after the expiry of the Suncorp lease and prior to the recission of the Original Contract) confirmed:
I have invoiced Suncorp for the $50,000 make good / defit contribution as agreed with the intended buyers (copy attached) and I have advised FKG that we have issued the invoice and it will be adjusted in the selling price and everyone was in agreement.
[78] I do not accept, therefore, that at the date of the recission of the Original Contract that FKG01 was in a position where Suncorp’s lease had ended without making good and Jeteld was to retain the $50,000 Suncorp payment that permitted Suncorp not to make good.
…
[80] In a perfect world a formal amendment to the Original Contract might have been recorded, but the failure to do so does not change the correct legal position between the parties that if the Original Contract settled, Jeteld was required to account for the Suncorp payment to FKG01 (expressly by informal agreement or impliedly).”10
“[88] I accept that, following the Adjustment, 122Marg’s interest in the property represented a ‘financial benefit’. I also accept that the Adjustment reduced the purchase price, which created a benefit derived by 122Marg pertaining to the monetary expenditure required to obtain the property. However, I do not accept that, properly characterised, this benefit is akin to a payment of money rather than being an interest in the dutiable property. The Adjustment specifically provided for a reduction of the purchase price of the dutiable property. Ultimately, the benefit acquired by 122Marg was an interest in the property for a reduced sum of money, not the payment of that money itself. The question then is whether the unencumbered value of that interest represents a profit for FKG01 because of the resale agreement (s. 115(2)(b)(ii)).”11
“[89] …122Marg pays market value for the property which simply takes into account an adjustment for the lack of Suncorp making good at the end of its lease. There is no part of that transaction that represents a profit for FKG01 because of the Replacement Contract.
[90] It does not matter of itself that 122Marg ultimately pays a different price for the property than FKG01 may have paid under the Original Contract. The question is whether the difference represents a profit for FKG01 or a related person because of the resale agreement.
[91] If the ‘discount’ given to 122Marg in obtaining its interest in the property could be properly characterised as representing a profit to FKG01 (for example, a kickback so that 122Marg pays less than market price for the property), then that may be a financial benefit of the type contemplated by s 115(2)(b) of the DA. But that is not this case.
[92] Here there is, in my opinion, no financial benefit falling outside of s 115(2)(b) of the DA. 122Marg did not obtain any interest in the property beyond what it paid market value for, nor did it pay any less money than market value to obtain that interest in the property. The lower purchase price it did pay under the Replacement Contract simply counterbalanced a different financial benefit that FKG01 would have obtained had the Original Contract proceeded to settlement (even at the later date post the expiry of the Suncorp lease). Therefore, there is nothing representing a ‘profit’ for FKG01 or a related person because of the Replacement Contract.”
“[109] … the indemnities could only provide any type of financial benefit to FKG01 if in fact there was liability for transfer duty on the cancelled agreement. If there is not, the indemnities provide no financial benefit. An indemnity that does not operate to provide an actual financial benefit is not itself a financial benefit. Any reasoning to the contrary is circular. A financial benefit under s. 115(2)(b) of the DA must be real and not merely theoretical.
[110] The indemnity in clause 5.1 is not a financial benefit for the purposes of s. 115(2)(b) of the DA.”
The appeal to this Court
Ground 1
By ground 1, the Commissioner contends the primary judge erred by “misconstruing and then misapplying the statutory scheme” in finding that the adjustment to the purchase price under the replacement contract was not a “financial benefit”. The Commissioner’s argument under this ground is that the primary judge impermissibly went outside the grounds stated in FKG01’s objection, in particular, by considering the characterisation of the agreement between Jeteld and FKG01 as to the treatment of the $50,000 payment made by Suncorp, in the terms set out in the Reasons at [76] and [78].
This ground is misconceived. FKG01’s argument, from the outset, was that the adjustment to the purchase price, recorded in special condition 13, was not a “financial benefit” received by 122 Margaret Street under the replacement contract falling outside s 115(2)(b)(ii), because the sole purpose of the adjustment was to place 122 Margaret Street into the same position FKG01 would have been, had the original contract settled as originally envisaged. This was articulated in FKG01’s objection,12 and in its notice of appeal (at paragraphs 13-16). It was implicit in that argument that there was an (informal) agreement between Jeteld and FKG01, that Jeteld would account to FKG01 for the $50,000 received from Suncorp. The primary judge was required to address this issue, in order to address the grounds of the appeal. Although her Honour makes reference to implication of a term (in the Reasons at [76] and [78]) it is clear that her Honour was not proceeding on the basis of an implication into the original contract in the BP Refinery13 sense. Properly understood, her Honour’s finding was that there was a later informal agreement between Jeteld and FKG01 about the $50,000. That finding was plainly correct, on the evidence which was before the court. There is no merit in ground 1.
Ground 2
Ground 3
By ground 3, the Commissioner contends that the primary judge erred by considering the operation of s 115(2)(b)(ii), because FKG01 waived reliance on that provision, and so the Commissioner was denied procedural fairness.
There is no merit in this ground. The whole of s 115(2) was directly relevant to the determination of the appeal, including s 115(2)(b)(ii). It was raised in FKG01’s objection,14 and by its notice of appeal; it was included within the agreed list of issues in dispute filed in advance of the hearing; it was addressed in FKG01’s written submissions,15 and in the Commissioner’s written submissions.16 The so-called “waiver” is said to have arisen from something said by senior counsel for FKG01, during the hearing of the appeal, whilst he was taking the primary judge through s 115. The relevant extract is as follows:
“MR HARRISON: … Section 115 continues, ‘For subsection (1)(d), an agreement is a resale agreement if under the agreement any of the dutiable property the subject of the cancelled agreement is or will be transferred or is agreed to be transferred’, so that element is satisfied.
HER HONOUR: Yes.
MR HARRISON: ‘(b) the transferee under the cancelled agreement or a related person of the transferee receives or will receive, directly or indirectly, a financial benefit other than’- to matters that don’t apply, and ‘financial benefit” is defined in – I thought I had flagged it – sorry, at – who was a related person is defined in section 61 ‑ ‑ ‑
HER HONOUR: Yes.
MR HARRISON: ‑ ‑ ‑ and that requirement is satisfied. And so the issue is simply whether a related person – in this case it is the original vendor – sorry, I withdraw that. A related person receives or will receive, directly or indirectly, a financial benefit other than the things mentioned. …”17
The Commissioner contended below, and maintains in this Court, that by the first underlined words, “to matters that don’t apply”, Mr Harrison KC should be taken to have waived reliance on s 115(2)(b)(ii). The primary judge was correct to reject that argument. There is no basis on which to infer, from that phrase, that FKG01 was waiving reliance on s 115(2)(b)(ii). That becomes abundantly clear a few lines on in the transcript, when Mr Harrison KC articulates the issue as whether a related person receives or will receive a financial benefit “other than the things mentioned”, inferentially, in s 115(2)(b). It is equally clear from Mr Harrison’s reference, only a few lines further on in the transcript, to there being “no element of profit in the transaction” (which can only be a reference to s 115(2)(b)(ii)).
Further, by the time the primary judge came to deliver her decision, she had given the parties the opportunity to be heard in relation to the further issue raised in the associate’s email sent on 10 April 2025, which directly concerned s 115(2)(b)(ii). It was entirely appropriate for the primary judge to address the application of s 115(2)(b)(ii) in the circumstances of this case.
Grounds 4, 5 and 6 – the indemnities
By ground 4, the Commissioner contends the primary judge erred in failing to find that the indemnities provided by Jeteld to FKG01 were a “financial benefit” for the purposes of s 115(2)(b), in circumstances where those indemnities extended to:all costs in objecting to any decision to disallow the application for reassessment;all costs in appealing any adverse objection decision on the application for reassessment;meeting any adverse costs order in that appeal; andthe amount of transfer duty if it was not refunded.
By ground 5, the Commissioner contends the primary judge erred in finding the indemnities were not a financial benefit, given that they were (a) “conscientiously sought by FKG01” and (b) “akin to insurance to protect FKG01 in advance from a potential detriment”.
Ground 6 seems to raise the same point as ground 4 – that the indemnities should have been considered a “financial benefit” because they were of “real value” to FKG01, because “they placed FKG01 in a better position than if the exemption had been conferred by the Commissioner or the Court”, because FKG01 can recover its actual costs of objecting to the Commissioner’s decision, and conducting the appeal.
It is important to keep in mind that the original contract was cancelled and a new replacement contract entered into at the request of the seller, Jeteld. Once 122 Margaret Street was substituted as the buyer under the replacement contract, FKG01 received no benefit from either the original contract or the replacement contract. The indemnity under clause 5.1 of the deed of rescission makes commercial sense in that context. Because the original contract was cancelled at the request of Jeteld, Jeteld agrees to indemnify FKG01 in the event transfer duty is found to be payable on the original contract (clause 5.1(b)), and Jeteld is authorised by FKG01, at Jeteld’s expense, to do whatever is required in order to challenge such an assessment (clause 5.6), which is in Jeteld’s interest.
The Commissioner submitted that the indemnity(ies) offered by Jeteld to FKG01 were an “immediate benefit” to FKG01, because it had already paid the transfer duty on the original contract; they were an actual financial benefit to FKG01 because the effect of clause 5.6 was to cover the whole of any costs involved in challenging the assessment (as opposed to FKG01 possibly only recovering part of those costs, in the ordinary course of proceedings); and was also a financial benefit because it enabled FKG01 to “keep its foot on the property”18 until the replacement contract was finalised.
The Commissioner’s arguments in support of each of these grounds are rejected.
If the replacement contract were otherwise a “resale agreement” within the meaning of s 115(2)(b), this argument would be irrelevant.
Grounds 7 and 8 – the adjustment to the purchase price
By ground 7, the Commissioner contends the primary judge erred in finding the adjustment to the purchase price was not a “financial benefit” outside s 115(2)(b)(ii), because the adjustment “is monetary in character, and not an interest in the property being transferred”.
By ground 8, the Commissioner contends the primary judge erred in finding that the adjustment was not a “financial benefit” outside s 115(2)(b)(ii), because:
“(a) properly characterised, the quantum of the Adjustment was the amount that Suncorp was prepared to pay in lieu of complying with the make good provision in its lease;
the quantum of the Adjustment should not be taken as reflective of any diminution of unencumbered value of the property; and
there was no evidence in support of the proposition that the unencumbered value of the property under the cancelled agreement was the same as the unencumbered value of the property under the Replacement Contract.”
In so far as 122 Margaret Street is concerned, what it received under the replacement contract was (an interest in) the property, for the price of $10,000,000 less $50,000. It did not receive $50,000 as a monetary sum. The effect of special condition 13 of the replacement contract was that, at settlement, the purchase price was reduced by $50,000, meaning in practical terms that 122 Margaret Street only had to pay $9,950,000. 122 Margaret Street did not receive any financial benefit other than the interest in the property in return for paying the purchase price less the adjustment.
In so far as FKG01 is concerned, there is no basis on which to conclude that the adjustment to the purchase price under the replacement contract represented a profit for FKG01 because of the replacement contract. Under s 115(2), an agreement [the replacement contract] is a resale agreement if:under the agreement [the replacement contract], any of the dutiable property the subject of the [original] cancelled agreement is or will be transferred or is agreed to be transferred; andthe transferee under the [original] cancelled agreement [FKG01] or a related person of the transferee [122 Margaret Street] receives, or will receive, directly or indirectly a financial benefit other than –the release of the transferee [FKG01] from the transferee’s obligation under the [original] cancelled agreement; oran interest in the dutiable property to the extent that the unencumbered value of the interest does not represent a profit for the transferee [FKG01] because of the resale agreement [the replacement contract].
Importantly, s 115(2)(b)(ii) refers only to the transferee [which is FKG01], not to the transferee or a related person of the transferee.
FKG01 did not receive anything “because of” the replacement contract.
The primary judge’s conclusions at [88]-[89] of the Reasons were correct.
Conclusion and orders
The original contract was ended with the consent of the parties to it and the replacement contract is not a “resale agreement”. Therefore, transfer duty is not payable on the transaction the subject of the original contract.
The decision below was correct. I would dismiss the appeal, with costs.
DOYLE JA: I have had the benefit of reading the draft judgment of Bowskill CJ. I agree with her Honour’s reasons and proposed order.
WILSON J: I agree with Bowskill CJ.
FKG01 Pty Ltd v Commissioner of State Revenue [2025] QSC 105 (Reasons). ↩
Underlining added. ↩
Underlining added. ↩
Underlining added. ↩
Wakefield v Commissioner of State Revenue [2019] QSC 85 at [32] and [34]. ↩
Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 621. ↩
See also Queensland Chamber of Commerce and Industry Ltd v Commissioner of State Revenue [2015] QSC 77 at [96]. ↩
Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 621. ↩
Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 624 and Commissioner of Taxation v Australia and New Zealand Savings Bank Ltd (1994) 181 CLR 466 at 479. ↩
Underlining added. ↩
Underlining added. ↩
See paragraphs [18], [19] and [20] above. ↩
Commissioner of State Revenue
FKG01 Pty Ltd [2026] QCA 12
(1977) 180 CLR 266
(1994) 181 CLR 466
(1990) 168 CLR 614
Appeal dismissed, with costs. The original contract was ended with the parties’ consent, the replacement contract was not a resale agreement, and transfer duty was not payable on the transaction under the original contract ([57]–[60]).
Where, as in this case, the replacement contract is not otherwise a “resale agreement”, an indemnity in terms of clause 5.1 and 5.6 is not a “financial benefit” for FKG01. As the primary judge correctly found, the indemnity(ies) merely ensure that no detriment is suffered by FKG01 by reason of the cancellation of the original contract and the substitution of a new buyer. FKG01’s position is rendered neutral by operation of the indemnity, consistent with the fact that at the end of the day, it receives nothing from the transaction.
It is circular, illogical and unreasonable for the Commissioner to argue that a replacement contract, between the seller and buyer #2, which is otherwise not a “resale agreement” within the meaning of s 115(2)(b), and therefore not liable for transfer duty, becomes a “resale agreement” if the seller and buyer #1 under the original contract make an arrangement between them to ensure buyer #1 is not out of pocket in the event that the Commissioner makes a decision about transfer duty on the original contract which is shown to be wrong, and which buyer #1 would otherwise have to incur costs to correct.
The primary judge’s conclusion at [109] of the Reasons is correct.
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. ↩
See paragraph [18] above. ↩
FKG01’s written submissions below, for example, at [7], [18] and [19]. ↩
Commissioner’s written submissions below, for example, at [4.1], [4.2], [5.11] and [6.17]. ↩
Underlining added. ↩
Transcript of the appeal, 1-22. ↩