Queenslands New Land Tax
As of June 30, 2022, the Queensland state government has implemented significant changes to the land tax rules, impacting property investors across the region.
These changes, initially announced in 2021, broaden the scope of taxable land holdings to include properties throughout Australia. In this blog post, we’ll explore the implications of these changes and provide essential insights for investors.
Understanding Land Tax
Definition of Land Tax Land tax is a state and/or territory government levy calculated on the freehold land you own. The tax rate varies based on factors such as ownership type – whether individual, company, or trustee.
Land Liable and Exempt in Queensland
Land Liable for Land Tax in Queensland:
- Vacant land
- Lots owned by a home unit (company)
- Lots in timeshare schemes
- Lots in group title plans
- Lots in building unit plans
- Land that is built on (e.g., investment properties)
Land Exempt from Land Tax in Queensland:
- Principal place of residence
- Transitional home
- Primary production
- Moveable dwelling park
- Aged care facilities
- Supported accommodation
- Subdivider discount
- Covid-19 relief
- Other exemptions
Changes Before June 30, 2022
Before the recent changes, land tax calculations were based solely on the unimproved land value in Queensland, excluding any land holdings outside the state.
Calculation Example:
- PPOR in QLD with a taxable land value of $700,000
- Investment property in QLD with a taxable land value of $700,000
- Investment property in Victoria with a taxable land value of $700,000
Land Tax Calculation: $500 + (0.01 x ($700,000 – $600,000)) = $1,500
Changes After June 30, 2022
The recent changes include incorporating land holdings across Australia in the taxable land value.
New Calculation Example:
- QLD investment property with a taxable land value of $700,000
- Victorian investment property with a taxable land value of $700,000
Land Tax Calculation: $4,500 flat fee + ($0.0165 x (total taxable land value – $1,000,000))
Total Payable Tax: $11,100 – a 13.51% increase on land tax.
Practical Issues and Considerations
There is ambiguity on whether land in the state/territory of ownership will still be taxed separately, potentially leading to double taxation on land across Australia. Implementation challenges are anticipated, and investors are advised to stay informed.
Conclusion: Navigating the Changes
While the changes aim to close tax loopholes, they may inadvertently increase taxes on investors with properties in multiple jurisdictions. Most investors seek passive income and capital growth, with tax savings being a secondary benefit. If you are affected by these land tax changes, consult with your trusted accountant and legal professional to explore legal avenues for tax reduction.
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