Buying a Queensland Business: What Due Diligence Should Cover and What a Finding Changes

Key Takeaways

• Due diligence on a Queensland business purchase runs across eight areas: contracts, the premises lease, employees, licences and permits, register searches, tax and duty, intellectual property and the business's history with courts and regulators.
• Queensland charges transfer duty on business assets under the Duties Act 2001 (Qld), including goodwill, business names, franchise rights, intellectual property and plant and equipment. GST-free going concern treatment depends on the conditions in s 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), including a written agreement made on or before the day of supply.
• In an asset sale, employees do not transfer automatically. The transfer of business rules in the Fair Work Act 2009 (Cth) decide what follows them, and Queensland long service leave accrued with the seller carries over under the Industrial Relations Act 2016 (Qld).
• Security interests are found on the Personal Property Securities Register (PPSR), not at the Australian Securities and Investments Commission (ASIC). Search by grantor and by serial number immediately before completion and have every registration released or consented to before the price is paid.
• A finding in diligence has six usual answers: a price adjustment, a change of structure, a specific indemnity, a retention to back it, a condition precedent or walking away. Which one fits depends on the finding and on the rest of the deal.

1. 1.The eight areas to check
2. 2.Which findings change the price or the structure?
3. 3.How long does it take from heads of agreement to completion?
4. 4.What do you do when diligence turns something up?
5. 5.Where it depends on your facts
6. 6.Frequently Asked Questions

Due diligence on a Queensland business purchase is how a buyer finds out what it is buying before the contract binds it. It covers eight areas: contracts, the lease, employees, licences, searches, tax and duty, intellectual property and the business's history with courts and regulators. In Queensland the Duties Act 2001 (Qld) charges transfer duty on business assets, so duty belongs on the checklist from the start. Astris Law in Brisbane sets out what to check, what changes a deal and what to do about a finding.

The eight areas to check

Contracts and change of control

Start with the agreements that produce the revenue. In an asset sale each must be assigned or novated to you, often only with the counterparty's consent; in a share sale a change of control clause can let the counterparty terminate instead. If the business trades on standard terms with small business customers, unfair terms in them are void and carry penalty exposure that a share buyer inherits.

The premises lease

Check the term, options, permitted use and make good clause, then the assignment clause. Since 1 August 2025, s 142 of the Property Law Act 2023 (Qld) has applied to Queensland commercial leases whether signed before or after that date: where the landlord's consent is required, the landlord must not unreasonably withhold it, must decide within one month of receiving full particulars of the proposal and must give reasons. Under the Retail Shop Leases Act 1994 (Qld) the outgoing tenant must give you an assignor disclosure statement at least seven days before the landlord is asked to consent (s 22B).

Employees

In an asset sale, employees do not come with the business; you re-employ them, and the Fair Work Act 2009 (Cth) (FW Act) decides what follows. A transfer of business occurs where you employ the seller's staff within three months on the same or substantially the same work and you now use the seller's assets or are otherwise connected (s 311). Prior service then counts and accrued personal leave carries over, although a buyer not associated with the seller may decline to recognise service for annual leave (s 91) and redundancy pay (s 122). Queensland long service leave transfers under the Industrial Relations Act 2016 (Qld) when the staff stay on. In a share sale the company stays the employer, nothing is re-signed and every accrued entitlement, along with any unpaid superannuation, stays inside the company you are buying.

Licences and permits

Some licences follow the premises, some follow the person and some cannot move at all. A liquor licence is transferred on application under s 113 of the Liquor Act 1992 (Qld); until approval, the buyer needs an interim authority to trade. A food business licence under the Food Act 2006 (Qld) is not transferable, so the buyer must hold its own council licence before trading. A licence from the Queensland Building and Construction Commission (QBCC) belongs to the licensee and cannot be sold with the business.

Searches: the company register and the PPSR

An extract from the Australian Securities and Investments Commission (ASIC) shows officers and shareholders but not security interests, which since January 2012 sit on the Personal Property Securities Register (PPSR). Search by grantor (the seller's ACN or ABN) and by serial number for vehicles. A buyer for value takes free of an unperfected security interest under s 43 of the Personal Property Securities Act 2009 (Cth), but a perfected interest will usually follow the asset into your hands, so search immediately before completion and have every registration released before the price is paid.

Tax and duty

Under s 10 of the Duties Act 2001 (Qld) dutiable property includes a Queensland business asset, which the Queensland Revenue Office (QRO) lists as goodwill, statutory business licences, business names, franchise rights, debts owed by Queensland debtors, supply rights, intellectual property and plant, equipment and stock. QRO's published scale reaches $38,025 plus $5.75 for every $100 over $1 million. Under s 37, a transaction only for intellectual property or personal property of a business, with no other Queensland business asset in the same or an aggregated transaction, is not dutiable; narrower carve-outs cover supply rights and debts. On GST, a going concern is GST-free under s 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) only where the buyer is registered (or required to be), the parties agree in writing on or before the day of supply and the seller supplies everything necessary and carries the enterprise on until that day (Australian Taxation Office guidance).

Intellectual property and brand

A registered business name confers no ownership of the brand, so search the trade marks register and confirm who owns the domain and any contractor-built copyright.

History with courts and regulators

Then look backwards: court and tribunal searches, published regulator actions in the business's industry and any complaints the seller discloses.

Which findings change the price or the structure?

Most findings can be dealt with in the contract. The ones that change the deal are a counterparty who will not consent, a lease with too little term left and no option, PPSR registrations the seller cannot get released and superannuation or long service leave never accrued in the accounts. A licence that will not transfer in time, a brand owned by a related entity, undisclosed litigation and goodwill that sits with the seller personally do the same.

How long does it take from heads of agreement to completion?

1. Heads of agreement, usually non-binding apart from exclusivity and confidentiality, with a diligence period written in.
2. Diligence and contract drafting in parallel, commonly three to six weeks for a small business.
3. Signing, with conditions precedent for what the parties do not control: landlord consent (one month under s 142), licence transfers, PPSR releases and finance.
4. Completion, then notifications, including to the QBCC within 14 days of a director or nominee change in a share sale.

Allow six to twelve weeks where no licence sits on the critical path; a liquor or council licence can add several weeks.

What do you do when diligence turns something up?

• Reduce the price or defer part of it through an earn-out.
• Change the structure: carve the asset out or switch between assets and shares where a licence, lease or contract will not otherwise move.
• Take a specific indemnity. Warranties are usually qualified by disclosure, so a problem you found and accepted rarely grounds a warranty claim later and needs its own indemnity outside the general caps.
• Hold back part of the price in trust or escrow so the indemnity has something to bite on.
• Make the fix a condition precedent, so completion waits for the consent or the release.
• Walk away, which is the option diligence exists to preserve.

Where it depends on your facts

Whether a finding matters usually turns on four things: assets or shares, a retail shop lease or an ordinary commercial lease, whether a statutory licence stands between you and opening day and whether the goodwill belongs to the business or to the person selling it. The same PPSR registration or unpaid long service leave can be a footnote in one deal and a reason to restructure another, and a general article cannot tell you which. That is where the map stops and advice on your own deal begins. If a finding has landed part way through a purchase, call Jamie Nuich at Astris Law on (07) 3519 5616 and talk through what it does to your deal; our approach is set out under business sales and acquisitions.

Frequently Asked Questions

Do I pay stamp duty when I buy a business in Queensland?

Yes, in an asset sale. Transfer duty under the Duties Act 2001 (Qld) applies to Queensland business assets, goodwill included. A share purchase raises different duty questions, because the shares change hands rather than the business assets.

Do the employees transfer when I buy the business?

No, not automatically in an asset sale. The FW Act transfer of business rules decide what follows: prior service counts, personal leave carries over and Queensland long service leave transfers. A buyer unrelated to the seller may decline to recognise service for annual leave and redundancy pay. In a share sale the employer does not change and accrued entitlements stay with the company.

How long does due diligence take?

Commonly three to six weeks for a small business, with the contract drafted alongside. Heads of agreement to completion usually runs six to twelve weeks, longer where a liquor or council licence sits on the critical path.

Why search the PPSR before completion?

A perfected security interest will usually follow the asset into your hands. Search by the seller's ACN or ABN and by vehicle serial number just before completion and have every registration released before the price is paid.

This article is for general information purposes only and does not constitute legal advice and should not be relied on as such. While we take reasonable care to ensure the accuracy of the information provided, we make no representations or warranties as to its completeness, currency or reliability. We accept no liability for any loss or damage arising directly or indirectly from the use of, or reliance on, this website's content. You should always seek professional advice tailored to your specific circumstances before acting on any information in this article. Liability limited by a scheme approved under Professional Standards Legislation.

Astris Law is not a registered tax agent and does not provide tax advice. References to tax law in this article describe the legal framework only. For tax advice specific to your circumstances, consult your registered tax agent or accountant.