The implications of Karrabin v CSR for property developers and foreign investors

Karrabin Estate Pty Ltd, Hayview Developments Pty Ltd & Avon Capital Estate (Australia) Ltd v Commissioner of State Revenue [2025] QSC 263 (Karrabin v CSR).

The implications of Karrabin v CSR for property developers and foreign investors.

This case clarifies the limits of judicial review in Queensland when it comes to refusals of ex gratia tax relief. The decision confirms that:

• Such refusals are not ‘reviewable decisions’ under the Judicial Review Act 1991 (QLD) (the Act).
• Ex gratia relief is a discretionary, non-binding act of grace rather than a legal entitlement.
• Public rulings issued by the Commissioner of State Revenue (the Commissioner) are guidelines, not enforceable law, and courts will not compel strict adherence to them.

This case is particularly relevant for property developers and foreign investors navigating Queensland’s Additional Foreign Acquirer Duty (the foreign duty) and the Land Tax Foreign Surcharge (the land tax surcharge) regimes, as it highlights the practical and legal boundaries of seeking relief from these.

    Relevant facts and circumstances     

On 17 October 2025, the Supreme Court of Queensland (the Court) handed down its decision in Karrabin v CSR.

In this case, the applicants were related property development companies – Karrabin Estate Pty Ltd (Karrabin) and Hayview Developments Pty Ltd (Hayview), together the ‘taxpayers’ – both owned by UK-based Avon Capital Estate (Australia) Ltd (Avon). 

Both Karrabin and Hayview had acquired and developed Queensland land for resale and, due to Avon being a foreign owner, the foreign duty under Duties Act 2001 (QLD) and the land tax surcharge under Land Tax Act 2010 (QLD) had both been levied by the Queensland Revenue Office. 

Karrabin and Hayview applied for ex gratia relief from both the foreign duty and the land tax surcharge.

Notably, to qualify for ex gratia relief the Commissioner must be satisfied that (along with other requirements) an entity is ‘Australian-based’ and makes a “significant contribution to the Queensland community and economy.”  This is set out in two separate public rulings.[1]

Unpacking the Court’s decision

No ability to judicially review the refusal to grant ex gratia relief 

Broadly, government ministers (at both a state and federal level) are empowered to make payments not otherwise authorised by law (such as ex gratia payments), if they are satisfied there are ‘special circumstances’ which would warrant such a payment.[2] 

That is, at a high level, ex gratia relief is usually provided in the following circumstances:

• There is an anomaly in state tax legislation that results in the legislation being applied in an unintentional, anomalous, inequitable, or otherwise unacceptable way.[3]
• An entity has suffered a financial or other detriment as a result of the workings of government, but there is no legal obligation for the government to compensate for that detriment, yet it is morally justifiable for the state to make a payment in the circumstances.[4]
• If granting the ex gratia relief is consistent with the broad intention of the relevant legislation.[5]

Karrabin v CSR confirms there is no avenue of judicial review in the context of refusals of ex gratia relief made under section 72 of the Financial Accountability Act 2009 (QLD) – which provides the discretion to grant ex gratia relief from the foreign duty and land tax surcharge – on the basis that the heart of the power to grant it is a discretion to be exercised by the Commissioner.

While the Act extends judicial review to the exercise of a discretionary power,[6] the relevant section that includes the words “made… under an enactment” requires that two criteria are met. These criteria were set out in one of the most important Australian judicial review judgements delivered to date: Griffith University v Tang (2005) 221 CLR 99 (Griffith University v Tang):

1. The decision must be expressly or impliedly required or authorised by the enactment.[7]
2. The decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment. 

In particular, the second criteria from Griffith University v Tang requires a “characterisation of the particular outcome which founds an application for review.”[8]  This requires an alteration of the applicant’s legal rights and obligations.

In the case of Karrabin v CSR , despite the Commissioner’s refusal to grant the ex gratia relief, the taxpayers’ legal rights and obligations remained as they were before the refusal decision was made. As such, the decision not to grant ex gratia relief was not reviewable under the Act. 

Further, the discretion to grant ex gratia relief from the foreign duty and land tax surcharge is simply a payment given as a favour or from a sense of moral obligation, not because of a legal requirement. In other words, it is not a legal obligation. Therefore, refusing to grant such relief did not, as outlined in the second criteria in Griffith University v Tang, “confer, alter or otherwise affect legal rights or obligations.” 

An ex gratia payment is, by very definition, a payment made by an “act of grace” and no order can compel the making of an ex gratia payment.[9]

Applying public rulings to decisions

Public rulings, like those that cover the granting of ex gratia relief from the foreign duty and land tax surcharge, are non-binding policy and not enforceable rights. 

The taxpayers had contended that the principles of statutory interpretation applied to construing public rulings. This was rejected by the Court on the basis that public rulings are guidelines, not legislative rules.[10]  That is, they outline factors the Commissioner may consider; they don’t mandate outcomes. 

As such, courts will only interfere with a decision-maker’s application of such guidelines in very limited situations, such as where there has been a serious misinterpretation or misunderstanding of purpose.[11]  The Court ultimately held that the Commissioner was not legally required to follow his own rulings to the letter.

Finally, the taxpayers had also argued that the Commissioner had misinterpreted the rulings by holding that they did not ‘employ.’  However, the rulings’ wording specifically require that “the foreign entity employs Australian citizens or permanent residents,” yet the taxpayers had no direct employees. As such the Court held that, regardless of whether the decision was reviewable, the Commissioner had not made an error and his interpretation was not legally wrong. 

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