Changes that affect your land tax
*** UPDATE 30/09/22: The Qld government has shelved the below controversial new Land Tax idea after fierce resistance from the real estate sector and interstate governments. Interestingly they have deferred, not abolished the idea. It’s a backflip for now, but this does allow them to revive it at some stage in the future. It could also be a win for everyone if it turned into a wider overhaul of taxes. Our below article outlines the original proposal slated early this year. ****
The Queensland Government has introduced new land tax amendments which will consider the value of all land owned in Australia when determining land tax liability in Queensland. These changes represent a landmark shift in calculating Australian-owned property. Owners of interstate and Queensland holdings should be aware of these changes to determine if they will be affected come 30 June 2023.
Current calculation
Currently, land tax is calculated in Queensland based on the value of all non-exempt landholdings each financial year. This does not consider any landholdings in other states. The value of an owner’s landholding will determine the threshold and rates that apply regarding land tax, subject to any exemptions for certain classes of landholdings.
From 30 June 2023
Property owners will be required to declare their landholdings in all Australian states and territories from 30 June 2023. As part of the declarations, landholders must include:
the land description;
land value; and
percentage of ownership.
This will be used to calculate the total landholding value, determining if the tax-free threshold has been exceeded, and what rate of land tax will be paid. The tax only applies to the portion of land an owner has in Queensland.
New calculation
The total value of Australian land held by the landowner is calculated.
Next, the land tax on the value of the Australian Land is calculated under the assumption it is all in Queensland.
Finally, the total land tax amount is applied to the Queensland Proportion of the total value of Australian land owned.
Case study
Below is an example of how it will play out. Company XYZ Pty Ltd owns a non-exempt property in Queensland valued at $700,000. It also owns a non-exempt property in New South Wales valued at $1,800,000.
Under the current Queensland system, land falls in the bracket for land between $350,000 - $2,249,999. This gives a tax rate of $1,450 plus 1.7 cents for every $1 over $350,000. This would make XYZ’s land tax payable $7400. The NSW property would not be included.
Using the new method, the total Australian-owned land would be $2,500,000. This falls within the bracket of land valued between $2,250,000 - $4,999,999. The tax rate for this value is $33,750 plus 1.5 cents for every $1 over $2,250,000. This would give a total land tax value of $37,500. Then, applying the total land tax amount to the Queensland portion of the total value of Australian land owned, would provide a land tax assessment of $14,583.33.
How do landholders declare interstate landholdings?
If you own land in Queensland and interstate, you will be required to declare the interstate land holdings. This is done through a declaration form which can be completed through a QRO Online account. This will cover land value, description and percentage of ownership. From 30 June 2023, landowners must complete the declaration the earlier of either:
or within 30 days of receiving a land tax assessment notice.
on or before 31 October in that financial year.
Exemptions
Certain land in Queensland may be eligible for land tax exemptions based on the ownership and use of land. In the majority of cases, the eligibility requirements for exemptions that are available for land in Queensland will apply to interstate land as well, with equivalent requirements generally applying in some circumstances. Exceptions limited to Queensland land include Government land, Port authority land & societies, clubs and associations.
Landowners who are unhappy with their land tax assessment which includes interstate land can lodge an objection to the assessment. However, objections to the value of interstate land used in an assessment will be subject to the processes under the relevant state or territory land valuation framework.
To recap, owners of interstate and Queensland holdings should be aware of the above changes to determine if they will be affected come 30 June 2023. Owners confused about these amendments should seek legal advice to ensure they avoid any potential penalties.
