In December 2023, the Queensland Government took a significant step by introducing a Bill that brings substantial changes to the Pharmacy Business Ownership Act. This new legislation, which has been in the works for five years, aims to refine and modernise ownership rules, aligning them with those in other states such as New South Wales and Victoria. The changes will likely require pharmacy owners to review and possibly adjust their business structures to ensure compliance.
We have summarised the key changes introduced by the new Act and their implications for pharmacy owners.
Key Changes and Their Impact
New Licence Requirement for Pharmacy Ownership
Under the new Act, a person must hold a licence to own a pharmacy business. Current pharmacy owners must apply for a new licence under the updated rules. An eligible person is defined as:
Pharmacy owners will need to apply for a licence within one year from the date these parts of the Act come into force. Owners can submit their licence application at any time within this timeframe. It's crucial that owners apply by the end of the one-year period to avoid compliance issues.
Implementation Timeline
The Pharmacy Business Ownership Act 2024 (New Act) is expected to be legislated by 1 July 2025. Following this, a 12-month amnesty period will be granted for pharmacy owners to make necessary adjustments to their ownership structures to comply with the new regulations. This amnesty could be extended to 24 months depending on the complexity of existing structures.
Stamp Duty Exemptions
Although not fully detailed, it is expected that restructuring during the amnesty period will be exempt from stamp duty. This exemption could provide financial relief for pharmacy owners who need to adjust their business structures to comply with the new Act.
Formation of a Pharmacy Council
Queensland will establish a separate Pharmacy Council to oversee all 1,200 pharmacy structures over a four-year period. The council, funded by annual licence fees from every pharmacy (ranging from $1,700 to $2,500), will have a significant role in regulating pharmacy business ownership in Queensland. The council's duties include ensuring that ongoing ownership complies with the new Act.
Changes to Trust Structures
The new Act aims to restrict the use of corporate beneficiaries in trust structures. Trust structures that have corporations as beneficiaries will not be permitted because the beneficiary is considered to hold a material interest, and only practising pharmacists or close adult relatives may hold a material interest. This is similar to company structures, where shareholding cannot be held by another corporation. This was already known but is now being enforced.
A material interest in a pharmacy business is defined as:
Section 17 of the new Act upholds the limitation to a material interest in no more than five pharmacies.
What Does This Mean for Pharmacy Owners?
It's crucial for current and prospective pharmacy owners to understand these new regulations and their implications. If your business structure includes corporations as beneficiaries or other non-compliant elements, you'll need to make adjustments to avoid penalties. The two-year transition period should provide sufficient time for these changes.
Overall, these changes will have a considerable impact on pharmacy owners and prospective buyers in Queensland. Now is the time to review your business structures and ensure compliance with the new Act. If you have questions about how these changes might affect you, consult yield advisory who specialise in pharmacy business ownership.