Update: 30 September 2022
Earlier today, the Queensland government announced their decision not to proceed with the changes to land tax assessments which impacted landowners in Queensland who hold properties in other states. The changes would have resulted in additional land tax liabilities for certain landowners.
Partner of our Queensland firm, Kerry Bebendorf said “The scrapping of this change to Queensland land tax is welcomed. There is currently a housing crisis in Queensland and by making it more costly for investors to own properties seemed badly timed.”
The amendments to the tax had already been legislated and will now be deferred in Parliament.
It was previously reported that Queensland land tax assessments will be changing from 30 June 2023 onwards and property owners will need to consider this as their land tax assessments may increase next year.
Background
As a background, each state is responsible for administering land tax and all states have tax free thresholds in relation to landholdings. Historically, only Queensland landholdings would be taken into account when calculating land tax in Queensland. For example, an individual landholder with $600,000 in taxable land in Queensland and $400,000 in New South Wales, would only pay $500 in land tax in Queensland and no land tax in New South Wales based on the current thresholds. Alternatively, an individual with taxable landholdings of $1 million in Queensland would pay $4,500 in land tax (or an average rate of 0.45%).
The Queensland government made legislative changes to ensure land tax will be charged based on the “national taxable value” of landholdings owned Australia wide. As a result of these changes, an individual with $600,000 in taxable land in Queensland and $400,000 in New South Wales would pay $2,700 in land tax in Queensland (an average rate of 0.45%) on their Queensland landholdings, being the same rate as the landholder with all their landholding in Queensland.
Impacted taxpayers
These changes will only affect Queensland landholdings where the landowner owns land in multiple jurisdictions. These changes will not affect landowners who solely own land in Queensland. Furthermore, landowners will continue to be able to access any exemptions currently in place e.g., principal place of residence and primary production.
Exclusions from land tax calculation
If the interstate land meets certain requirements, landowners can apply to have their value excluded from the land tax calculation. Depending on where the land is situated, the following are the exclusions:
| Exclusions available for Queensland and interstate |
Exclusions available for Queensland only |
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The current tax-free thresholds are $600,000 for individuals (other than absentees) and $350,000 for companies, trustees and absentees.
Example of how it will work going forward
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
Lena’s land tax liability in Queensland will be $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)).
Lena’s land tax liability in Queensland will be $8,422.37.
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What do you need to do going forward?
Taxpayers will need to declare their interstate holdings if they own land in Queensland, and in another state or territory. This can be done through a QRO Online account and will need to be completed and submitted by the earlier of the following:
- within 30 days of receiving a land tax assessment notice
- on or before 31 October
Please note, this will only apply from 30 June 2023 onwards and there is nothing to do at this stage.
More information
If you would like to find out more, or need any assistance, please contact your local Moore Australia advisor.