In Queensland, as an individual in ownership of a property that is not your main residence, you are liable for land tax if the total taxable value of your freehold land (comprising land owned solely and your share in land owned jointly with others)—at 30 June, 2023 is $600,000 or more.
You may be eligible for exemptions to reduce your total taxable value. (For example, you may be eligible for a home exemption on land, or part of the land, you use as your home).
The rate of land tax that you pay is contingent on your status as an owner.
Companies, which includes clubs, associations, and societies, as well as trustees of trusts or superannuation funds, are obligated to pay land tax if the combined taxable value of all their land, including land owned solely and jointly with others, amounts to $350,000 or more.
If you serve as the trustee of a special disability trust, the land tax rates applicable to individuals will be used.
Changes to the land tax laws in Queensland
Property and land have traditionally held significant value for many Australians, making them crucial investment assets. With the ongoing property boom, landowners are now contemplating their next moves while keeping tax considerations in mind.
Prior to 30 June, 2023; Queensland property owners were solely evaluated based on the value of all non-exempt land within Queensland’s borders. For instance, if an individual owns land in Queensland as well as in another state, the latter is not factored into their Queensland land tax assessment.
Commencing from June 30, 2023, all land owned in any Australian state are now considered when assessing a landowner’s Queensland land tax liability.
What Does This Mean for Property Investors?
For property investors, this implies that their assets located in other states may be subject to land tax for the first time, or, place them in a different tax bracket than they had anticipated. If you solely own land in Queensland, these changes will not affect you.
The Calculation
If you own land in Queensland and other states or territories, a new calculation method will be employed:
- Determine the proportion of your Queensland taxable land compared to the total value of all taxable land you own across Australia.
- Calculate the land tax on this combined value as if all properties were located in Queensland.
- Multiply the Queensland proportion by the calculated tax if all land were in Queensland.
Let’s consider an example under the new rules:
Testcompany Pty Ltd owns:
- A Queensland property valued at $750,000
- A Victorian property valued at $2,000,000
- The total value of these properties would be $2,750,000, with the Queensland proportion being 27.272% ($750,000 / $2,750,000).
- Therefore, the total land tax payable on $2,750,000 would amount to $41,250.
- The land tax owed in Queensland would be $11,250 (($750,000/$2,750,000) x $41,250.00 = $11,250).
A Comparison:
Under the previous regulations, the same company would have expected to pay $8,250.
Consequently, the new rules result in a $3,000 increase in land tax.
Conclusion
It is vital that Queensland landholders to evaluate their property holdings and comprehend the changes introduced by the Land Tax Act 2010 (QLD). The land tax bill for properties held on June 30, 2023, could be notably higher than previously anticipated.
Additionally, Queensland landholders must understand their obligations regarding property declaration to the Queensland Revenue Office to avoid penalties. The responsibility lies with the landowner to report their interstate land holdings, either by October 31, 2023, or within 30 days of receiving the 2023 land tax assessment notice, whichever occurs earlier.
If these changes impact you or if you’re uncertain, please do not hesitate to contact our team.
