Decision Alert: High Court In G Global v Commissioner Of State Revenue Confirms Validity Of Foreign Surcharges

On 15 October 2025, the full bench of the High Court delivered judgment 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 (judgment here).

Two German-owned companies (acting as trustees) and a New Zealand citizen (collectively, the Taxpayers) had appealed against land tax assessments imposing an additional surcharge rate on the basis that the Taxpayers were considered foreign for the purposes of the Land Tax Act 2010 (Qld) (QLTA) and Land Tax Act 2005 (Vic) (VLTA).

The case concerned whether an amendment to the International Tax Agreements Act 1953 (Cth) (ITAA) by the Treasury Laws Amendment (Foreign Investment) Act 2024 (Cth) (Amending Act) was valid and effective to retroactively remove an inconsistency that had previously existed between the ITAA and provisions of the Land Tax Act 2010 (Qld) (QLTA) and Land Tax Act 2005 (Vic) (VLTA), which rendered those provisions inoperative in their application to the appellants.

The High Court, delivering a unanimous judgment, found that the Amending Act was effective in retroactively removing the inconsistency between the ITAA and the QLTA and VLTA, such that the relevant provisions of those Acts had retrospective effect. The Court therefore found that the Taxpayers were not entitled to any relief.

Takeaways from Decision

• In upholding the validity of section 5(3) of the ITAA, the most important point going forward is that provisions of state law imposing surcharge tax rates on foreign (or foreign-owned/controlled) individuals and entities will continue to operate, notwithstanding any tax treaty between Australia and the taxpayer's country that guarantees non-discriminatory tax treatment.

• The Court reiterated longstanding principles emphasising that a law imposing 'genuine taxation' will not be a law with respect to the acquisition of property; section 51(xxxi) of the Constitution is therefore unlikely to be fertile ground for future challenges to the constitutionality of taxation law unless it can be demonstrated that the tax does not meet the description of a 'genuine tax'.

• From a constitutional law perspective, the overruling of Metwally is significant, as Parliament is no longer restrained from retrospectively curing a past period of operation caused by section 109 of the Constitution.

Factual & Procedural Background

GG Entities – Queensland

• Two of the plaintiffs, G Global 120E T2 Pty Ltd and G Global 180Q Pty Ltd (GG Entities), held land in Queensland as trustee for the G Global 120E AUT and G Global 180Q AUT (GG Trusts) respectively. The GG Entities and GG Trusts were owned and controlled by a company incorporated in Germany.

• The GG Entities, due to the German parent's controlling interest in the GG Trusts, were taken to be foreign for the purpose of the QLTA. When the GG Entities were assessed with land tax in the 2020-21 and 2021-22 financial years (GG Assessments), the assessments included a surcharge amount (the land tax foreign surcharge (LTFS)).

• Following an unsuccessful objection to the Commissioner for State Revenue of Queensland, the GG Entities appealed to the Queensland Supreme Court against the GG Assessments; these proceedings were removed into the High Court to determine questions of law.

Mr Stott – Victoria

• The third plaintiff, Mr Stott, was a citizen of New Zealand who owned land in Victoria.

• Mr Stott received assessments for land tax under the VLTA for the 2016 to 2024 tax years (Stott Assessments), each of which included a surcharge amount (the absentee owner land tax surcharge (AOLTS)), imposed due to Mr Stott's foreign citizenship.

• Having initially commenced proceedings in the Federal Court, Mr Stott commenced proceedings in the original jurisdiction of the High Court seeking relief in relation to the Stott Assessments.

Statutory Framework

• Section 32(1)(b)-(c) of the QLTA, and sections 7, 8, 35 and Schedule 1 clauses 4.1-4.5 of the VLTA (Surcharge Provisions) impose a surcharge rate of land tax on 'foreign' owners of land in Queensland and Victoria respectively. This captures both foreign citizens, and companies and trusts that are either themselves foreign, or controlled by foreign individuals and / or foreign entities.

• The imposition of LTFS on the GG Entities and AOLTS on Mr Stott was contrary to the provisions of an agreement between Australia and Germany (German Agreement) and an agreement between Australia and New Zealand (NZ Convention) respectively. The German Agreement and NZ Convention (the Agreements) included non-discrimination clauses which precluded the imposition of a more burdensome taxation on German / New Zealand individuals or entities than on Australian individuals or entities in the same circumstances.

• Prior to 8 April 2024, the Agreements were given force of law in Australia by section 5(1) of the ITAA, which provides as follows:

'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.

Each of the Agreements was included in the list below section 5(1).

• On 8 April 2024, the Amending Act introduced section 5(3) into the ITAA, which stated:

'[t]he operation of a provision of an agreement provided for by subsection (1) is subject to anything inconsistent with the provision contained in a law of the Commonwealth, or of a State or Territory, that imposes a tax other than Australian tax, unless expressly provided otherwise in that law'

The amendment purported to apply in relation to taxes payable on or after 1 January 2018. 'Australian' tax included income tax and fringe benefits tax.

Issues

The questions of law referred to the High Court were (in summarised form):

• whether the Surcharge Provisions were invalid, by force of section 109 of the Constitution, by reason of inconsistency with section 5(1) of the ITAA;

• whether section 5(3) of the ITAA was supported by any head of Commonwealth legislative power;

• whether section 5(3) was effective from 1 January 2018 to remove the inconsistency between the Surcharge Provisions and section 5(1) of the ITAA;

• whether section 5(3) was invalid because it effected an acquisition of the property of the Taxpayers otherwise than on just terms; and

• what relief, if any, should be granted to the Taxpayers.

High Court's Decision

The High Court found as follows:

• Surcharge Provisions were Inoperative:Prior to the introduction of the Amending Act on 8 April 2024, the Surcharge Provisions were inoperative in their application to the Taxpayers, due to their inconsistency with section 5(1) of the ITAA and the operation of section 109 of the Constitution, which provides:

'When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.'

• Amending Act was supported by the External Affairs Power:Section 5(3) of the ITAA (introduced by the Amending Act) was supported by section 51(xxix) of the Constitution, which included 'external affairs' as amongst the legislative powers of the Parliament.The Court rejected the GG Entities' submission that, in limiting the operation of section 5(1) in implementing agreements such as the Agreements, section 5(3) was not reasonablycapable of being considered as appropriate and adapted to the implementation of such agreements, and thus was not a law with respect to external affairs.The Court concluded that although section 5(3) limited the scope of section 5(1) in its implementation of international agreements, there was no 'inconsistency' between sub-sections (1) and (3), and section 5 of the ITAA remained reasonably capable of being appropriate and adapted to implementation of the Agreements.

• Amending Act was effective to cure Inconsistency; Metwally Overruled:Section 5(3) of the ITAA was effective to revive the operation of the Surcharge Provisions that were, prior to 8 April 2024, rendered inoperative.This required the Court to reopen and overrule University of Wollongong v Metwally (1984) 158 CLR 447 (Metwally). In Metwally, a majority of the Court had found that, where a provision had been rendered inoperative due to an inconsistency with federal legislation via the operation of section 109 of the Constitution, amending legislation, even whenpurporting to have retrospective effect, did not give the inoperative provision a valid operation prior to the introduction of the amending legislation.Metwally featured a fierce dissent (from Mason J, with whom Wilson and Dawson JJ agreed) and the majority view (now overruled) had faced some academic criticism (see forexample HP Lee, 'Retrospective Amendment of Federal Laws and the Inconsistency Doctrine in Australia' (1985) 15 Federal Law Review 335).

• No acquisition of Property on extinguishment of Appellants' Causes of Action:The Court also held that section 5(3) was not a law with respect to the acquisition of property within the meaning of section 51(xxxi) of the Constitution. As such, section 5(3) was not invalid on the basis that it effected an acquisition of property other than on just terms.The Taxpayers submitted that the retrospective operation of section 5(3) had the effect of extinguishing their choses of action for restitution of LTFS / AOLTS, which constituted 'property'.The Court rejected this submission, noting that genuine taxation is not an acquisition of property, and that LTFS and AOLTS, as 'genuine taxes' (that did not effect a direct expropriation of money or other property) were not laws with respect to the acquisition of property; similarly, a Commonwealth law reviving the operation of a State law imposing genuine taxation is not a law with respect to the acquisition of property.

Given the above findings, the Court concluded that no relief should be granted to the Taxpayers.

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