Sep 19, 2022 Matthew Hung

New QLD Land Tax rules – Now dumped

Queensland dumps controversial Land Tax

Queensland Premier Annastacia Palaszczuk has announced that its controversial land tax, which was to be calculated taking into account the total value of an owner’s Australia-wide land holdings, is to be dumped.

The announcement follows weeks of negative publicity and refusals by other state premiers to co-operate.  NSW Premier Mr Perrottet said he would refuse to provide home owner information to the Queensland government, stating that “this is a tax implemented by a state that impacts the residents of NSW. It’s wrong, and we’re not going to comply with it”.

The tax was expected to affect approximately 10,000 investors and recoup the Queensland government almost $20 million a year from 2023–24.

This is what was proposed

Land Tax is a state based tax which until now has been levied on the value of land owned by a taxpayer in that state.  The rate of tax is a sliding scale, allowing land owners to access the lower land tax rates on a state by state basis.

In a move designed to restrict access to these lower rates of land tax for owners of property across various Australian states, the Queensland government has introduced its Interstate Properties and Land Tax.

From 30 June 2023 that government will use the total value of your Australian land (not just Queensland land) when calculating Queensland land tax. Land that is exempt such as the family home, primary production land and land used for aged care facilities will remain exempt.

The impact of the new rules is perhaps best explained in this example from the Queensland government’s web site:

Example

On 30 June 2022, Lena owns land in Queensland with a taxable value of $745,000. Her land tax is calculated using the rates for individuals.

Taxable value of land: $745,000

Calculation

= $500 + (1 cent × $145,000)

= $500 + $1,450

= $1,950

We will issue an assessment notice for $1,950 for the 2022–23 financial year.

On 30 June 2023, the value of Lena’s land in Queensland has not changed. But Lena now also owns land in Victoria valued at $1,565,000. The total value of Australian land owned by Lena is $2,310,000, which means the land tax is calculated using a higher rate for individuals.

This is how Lena’s land tax will be calculated:

Taxable value of Australian land: $2,310,000

Calculation

= $4,500 + (1.65 cents × $1,310,000)

= $4,500 + $21,615

= $26,115

This amount is applied to the Queensland portion of Lena’s land (i.e. ($745,000 ÷ $2,310,000) × $26,115)).

We will issue an assessment notice for $8,422.37.

If you only own land in Queensland you will not be affected by the new rules.  However, if you own land in Queensland and in another state or territory, you will need to declare your interstate landholdings. You’ll need to set up a QRO Online account and complete the declaration, including land description, value and percentage of ownership.

From 30 June 2023, you will need to complete this declaration by the earlier of the following:

• within 30 days of receiving a land tax assessment notice
• on or before 31 October.

Commercial property Landlords will need to examine their leases in order to establish their entitlement to recoup the additional Queensland land tax from tenants.  This will be especially important for leases that are to be renegotiated in the coming year or so.

Those that are affected by the new rules will need to seek some wise advice when contemplating purchasing additional property.  This may include purchasing new property in a separate entity such as a company so that its value is not incorporated into the Queensland land tax calculation, as is unfortunately the case in the example above.

We can help you with advice on your specific circumstances.