On 15 October 2025, the High Court handed down its decision in G Global 120E T2 Pty Ltd v Commissioner of State Revenue; G Global 180Q Pty Ltd v Commissioner of State Revenue; G Global 180Q Pty Ltd v Commissioner of State Revenue; Stott v The Commonwealth of Australia [2025] HCA 39.
The decision, which was unanimous, found that the amendment made to s 5(1) of the International Tax Agreements Act 1953 (Cth) (Agreements Act) was valid and effective to retroactively remove an inconsistency that had previously existed between s 5(1) and provisions of the Queensland and Victorian Land Tax Acts.
Accordingly, the High Court has confirmed that section 5(3) of the Agreements Act could retrospectively override the non-discrimination article in Australia’s tax treaties with New Zealand and Germany. Equivalent non-discrimination articles are included in the tax treaties with Finland, South Africa, India, Japan, Norway and Switzerland. Therefore, the outcome (and Australia’s unilateral enactment of section 5(3) of the Agreements Act more generally) is likely to be subject to careful international scrutiny, particularly in the context of future treaty negotiations with Australia.
Key Takeaways
- Section 5(3) of the Agreements Act acts retroactively to remove the inconsistency that had previously existed between s 5(1) (because of the non-discrimination article in the German and New Zealand tax treaties) and the Land Tax Act 2005 (Vic) (VLTA) and the Land Tax Act 2010 (Qld) (QLTA).
- Treasury Laws Amendment (Foreign Investment) Act 2024 (Cth) (the Amending Act) and the Agreements Act as amended are supported by the external affairs power in the Constitution.
- University of Wollongong v Metwally (1984) 158 CLR 447 is reopened and overturned, with the Court finding that retroactivity is not a barrier to changing Commonwealth law in circumstances where there is a foundation of prior inconsistency.
- Section 5(3) is not a law with respect to the acquisition of property within the meaning of s 51(xxxi) of the Constitution; reviving genuine State taxation does not engage s 51(xxxi).
- No relief is available for the taxpayers, on the basis that, while the relevant laws were found to be inconsistent, subsequent amendments, operating retroactively, worked to remove the prior inconsistencies.
- The decision will have implications for other state foreign person land tax and duty surcharges in respect of investors from countries with equivalent non-discrimination articles in their tax treaties with Australia, unless a specific exemption applies or surcharges have been applied in the period that precedes the application of the Amending Act and those periods are still open for review.
Background
G Global 120E T2 Pty Ltd and G Global 180Q Pty Ltd (GG Entities), both owned land in Queensland, but were owned and controlled by a company incorporated in Germany. Similarly, Mr Stott, a New Zealand citizen, owned land in Victoria. Both parties received land tax assessments that included surcharges imposed because they were foreign for the purposes of the relevant land tax regimes.
The GG Entities appealed against assessments of land tax made under the QLTA for the 2020-2021 and 2021-2022 financial years, on the basis that the imposition of the additional land tax on the GG Entities was contrary to the non-discrimination provisions of the Double Tax Agreement between Australia and Germany (the German DTA), which relevantly included (Article 24(5)):
Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.
Mr Stott broadly sought relief relating to assessments of land tax made under the VLTA for the 2016 to 2024 tax years on the same basis (that the imposition of the additional land tax was contrary to the provisions of the non-discrimination provision in the Australia and New Zealand Double Tax Agreement (the New Zealand DTA)). Australia has equivalent non-discrimination articles in its tax treaties with Finland, South Africa, India, Japan, Norway and Switzerland.
Prior Invalidity of State Land Tax Surcharges
The HCA was first asked to answer whether, prior to the introduction of the Amending Act, the provisions of the QLTA and VLTA were invalid by reason of its inconsistency with s 5(1) of the Agreements Act (and consequently the operation of s 109 of the Constitution).
Section 5(1) of the Agreements Act provides that:
Subject to this Act, on and after the date of entry into force of a provision of an agreement mentioned below, the provision has the force of law according to its tenor.
As such, the HCA found that, prior to 8 April 2024, the German DTA and the New Zealand DTA were given force of law in full in Australia by s 5(1) of the Agreements Act, and the relevant provisions of the QLTA and VLTA were therefore invalid and inoperative.
The Court found that at [41] that:
[t]here was clearly an inconsistency between Art 24 of the Agreements as given the force of law by s 5(1) of the [Agreements Act] and the higher rates imposed by the two land tax regimes on enterprises owned or controlled by residents of Germany and on nationals of New Zealand.
Further to this question, and in the GG Entities proceedings only, the Court was asked to answer whether s 5(3) of the Agreements Act, and the Amending Act is supported by any head of Commonwealth legislative power. The Court found that the provisions were supported by s 51(xxix) of the Constitution, being the external affairs power. The GG Entities argued that s 5(3) and the Amending Act could not be supported by s 51(xxix) because s 5(3) could not be considered reasonably appropriate and adapted to be able to implement the changes to s 5(1), and therefore was not a law with respect to external affairs. The Court disagreed with this assessment, finding that partial implementation does not deny the Agreements Act from being considered appropriate and adapted to implement the German Agreement.
Revival of inoperative taxes by amendments to the Agreements Act
Despite the Court finding that the provisions of the QLTA and VLTA were initially inoperative prior to 8 April 2024, after 8 April 2024, the Agreements Act was amended by the Amending Act to exclude State taxes, including land taxes, that were payable from 1 January 2018 from the scope of s 5(1) of the Agreements Act. As such, the Court held that s 5(3) of the Agreements Act effectively revived provisions of the VLTA and QLTA that imposed higher assessments of land tax on the basis of foreign ownership.
In doing so, the Court reopened and overturned University of Wollongong v Metwally (1984) 158 CLR 447 (Metwally) and adopted the minority view in that case on the application of s 109 of the Constitution to Commonwealth laws with retroactive or retrospective effect. The Court cited Dawson J’s dissent in Metwally, which observes (at 485):
When it is sought to apply s 109, then at that time the question must be asked whether there is any inconsistency between the relevant State law and the relevant Commonwealth law. If there is, then under s 109 the State law is inoperative to the extent of the inconsistency… And if the Commonwealth can remove an inconsistency by repealing the law there is no reason, in my view, why it cannot do so retrospectively.
The Court accepted that while Parliament cannot negate a direct collision through mere statements of intention, it can change the substantive Commonwealth law (including retroactively) to remove the foundation of prior inconsistency. It noted that limits on retroactive legislation arise from other constitutional doctrines and not s 109 - for example, principles like those discussed in Melbourne Corporation v The Commonwealth [1947] ALR 377, that protect the States’ capacity to exercise their constitutional functions, judicial power principles, or s 51(xxxi) in appropriate cases.
Are the amendments to the Agreements Act invalid and unconstitutional on the basis of s 51 (xxxi)?
Finally, the Court was asked to decide whether the amendments to the Agreements Act were invalid on the basis that they effected an acquisition of property not on just terms contrary to s 51(xxxi) of the Constitution. Broadly, Mr Stott and the GG Entities argued that their rights of objection and refund were choses of action and a form of property, and the retroactive operation of s 5(3) extinguished claims for restitution.
While the Court agreed that the taxpayers’ rights were choses in action, the Court confirmed that, in most cases, the imposition of genuine taxation will not constitute an acquisition of property. In this case, a Commonwealth law that revived the operation of State laws imposing genuine taxation was not an acquisition of property even where the Commonwealth law was supported by a head of power other than the taxation power in the Constitution and even where the Commonwealth law could also be characterised as a law extinguishing choses in action for the recovery of payments of taxes levied pursuant to the State laws that were previously rendered inoperative by s 109 of the Constitution.
