With financial year end approaching, now is the time to review your property portfolio and plan for any imminent land tax liability. The Queensland Treasurer has forecast that land tax revenue is expected to increase by up to $44m each year for the next 3 years.
The Queensland Government has announced an increased scrutiny of land tax, so landholders should take the opportunity to utilise an online resource to determine the taxable value of landholdings and to identify likely land tax payable, so that appropriate provision can be made for any potential land tax liability. You are able to find your unimproved land valuation for land tax calculation here.
There are exemptions that can be claimed to make sure that you are not paying undue land tax. If a taxpayer wishes to rely on an exemption to minimise exposure to land tax, then the precise requirements of the exemption, as it applies to an individual landowner’s circumstances, should be considered to ensure that the exemption is available and can be properly claimed.
If shortfalls are identified for prior years, then consideration should be given to whether a voluntary disclosure should be made, so as to minimise potential penalties. The default rate for penalties is 75% of any shortfall.
Land tax is based on property valuations conducted by the Department of Natural Resources and Mines. Tax is applied on a marginal basis depending upon land values. The land tax thresholds and maximum rates are:
|Entity||Tax Free Threshold||Maximum Rate|
|Individuals||$599,999||$62,500 + $1.75 for each $1.00 more than $5,000,000|
|Trusts & Companies||$349,999||$75,000 + $0.02 for each $1.00 more than $5,000,000|
All rates are disclosed on the Qld Office of State Revenue website: https://www.osr.qld.gov.au/land-tax/about-land-tax/land-tax-rates.shtml
There are strategies to avoid paying undue land tax which have a particular focus on ownership and the structure of entities. These should be considered prior to executing purchase contracts.
Exemptions relating to property being nominated as a principal place of residence are being scrutinised with items being reviewed including the amount of electricity and water being used in a property and if any non-qualifying uses for the exemption are evident, such as renting rooms out.
If you wish to dispute the valuation for land tax purposes now is the time to act. To discuss your land tax position, possible exemptions and advice please contact your usual Hanrick Curran advisor or Jamie Towers on (07) 3218 3900 for more information.
Please note that the above information is based on Queensland properties.
For information about Land Tax in other States, please contact the appropriate Office of State Revenue.
Thanks to McCulloch Robertson for contribution to content.