Australian Land Tax | Property Investment Advice

By Chan & Naylor | www.chan-naylor.com.au | Submitted 23rd April 2009

Land Tax is a State Tax and each State has their own rules and regulations. If you have properties in each of the different States you will need to meet their individual land tax obligations. So even if you have properties held by the same entity but in different States this entity will be required to lodge Land Tax Returns for each respective State. Each State has a different land threshold value before land tax is payable. Each State also has different rules regarding the land tax treatment for Trusts. Land tax is an ongoing obligation and so it is an important tax which may require clarification.

You may be required to lodge a land tax registration form, or a land tax variation form, if any of the following have taken place:
• Bought an initial investment property;
• Bought additional investment properties;
• Sold an investment property;
• You have a holiday home; or
• If your circumstances have changed, for example you have begun renting out your existing principal place of residency.

Land tax is not applied to your principal place of residence if you are living in the property. The due date for land tax varies from state to state, so we suggest that you refer below to ascertain whether you are required to register for land tax or lodge a land tax variation form. Land tax is applied to the land component only of any property.

You can either click into the various States websites to lodge your own land tax returns or you can ask your Client Manager to do this for you. In summary, the State regulations are as follows, but you should ensure you understand the full impact of land tax as it may apply to you or your related entities as the summary below is not an exhaustive analysis:

Australian Capital Territory:
http://www.revenue.act.gov.au/land_tax  
Land tax in the Australian Capital Territory is assessed on a quarterly basis as at 1 July, 1 October, 1 January and 1 April. The land tax rates that apply to residential properties commence at $0 - $75,000 being taxed at 0.60%, and increase to 1.4% for land valued at $275,001 and above. For commercial properties the scale commences at $0 - $150,000 being taxed at 0.89%, and 1.25% for values between $150,001 and $275,000.

As stated on the A.C.T state Governments website, “The amount of land tax payable and payment details are specified on the quarterly land tax assessment notice.”

New South Wales:
http://www.osr.nsw.gov.au/taxes/land/  
Land tax payable in New South Wales depends on the taxable value of the landholdings at 31 December in New South Wales. The threshold below which no tax is payable is $359,000 for natural persons and companies. Above $359,000 land tax is $100 + 1.6% on the value above $359,000. Land tax that is subject to a special trust, or owned by a non-concessional company, will be taxed at the rate of 1.6% of the taxable value.

According to the N.S.W Office of State Revenue website “You need to pay your land tax by the first instalment date shown on your land tax notice of assessment. If you pay your land tax in full by this date, you will be eligible for a 1.5 per cent discount on your land tax.”

Queensland:
http://www.osr.qld.gov.au/taxes/land/index.shtml  
Land tax in Queensland is levied on the aggregate of the unimproved value of all freehold land owned in Queensland as at midnight on 30 June each Year. The threshold below which no tax is payable is $600,000 for natural persons. For companies, trusts and absentees the threshold is $350,000. Various rates of tax apply to amounts above the threshold.

South Australia:
http://www.revenuesa.sa.gov.au/index.html?http://www.revenuesa.sa.gov.au/taxes/ltax.html  
Land tax in South Australia is based on the site value of land at midnight the 30 June proceeding the financial year for which the tax is levied. The threshold below which no tax is payable is $110,000 for natural persons. Various rates of tax apply to amounts above the threshold.

The S.A Government website states “Payment of your Notice of Land Tax Assessment can be made in full as per the Total Amount Due on your notice or by quarterly instalments. Part payments of the full or instalment amount will not be accepted. If the instalment option is chosen, failure to meet any instalment will result in the unpaid remainder of the full annual amount becoming immediately due and payable. Penalties and interest will also be applied.”

Tasmania:
http://www.treasury.tas.gov.au/domino/dtf/dtf.nsf/vsro/1E5532F3112B68BFCA256FBF007E577C  
Land tax in Tasmania is assessed on the aggregate assessed value of the land held by the owner at 1 July. The threshold below which no tax is payable is $25,000. Various rates of tax apply to amounts above the threshold.

According to the Tasmanian State Government Land Tax information sheet, “Your account is payable by the due date. Payment options are explained on the land tax demand. “

Victoria:
http://www.sro.vic.gov.au/sro/SROWebSite.nsf/taxes_landtax.htm  
For land held in Victoria it is not necessary to lodge any Land Tax form as the State Revenue Office of Victoria will automatically send out an assessment, but if you have not received an assessment and you fall into an applicable category please contact your Client Manager as land tax is self assessed and the onus is on the taxpayer.

Land tax liability in Victoria is determined by applying the rates to the taxpayer’s portfolio of land held at 31 December. Land tax is payable at the ordinary rates where the unimproved value of a taxpayer’s landholdings in Victoria equal or exceeds $225,000. For trusts with aggregate property holdings above $20,000 a land tax surcharge of 0.375% on the ordinary rate of land tax applies. Some trust exclusions do apply, so please refer to the website above or your individual Client Manager for further information.

The Victorian State Revenue Office website states “The payment period for land tax assessments is 37 weeks (subject to certain conditions). If your assessment is greater than $200, you can choose to pay in full within 19 weeks or in four instalments over a 37-week period. If you have chosen the instalment option, you must pay each instalment by the due date to remain on the instalment program.”

Western Australia:
http://www.dtf.wa.gov.au/cms/osr_content.asp?ID=174  
Land tax in Western Australia is assessed on the basis of the unimproved value of land holdings as at 30 June each year. The tax threshold for the 2008 land tax year is $250,000.

W.A also applies a Metropolitan Region Improvement Tax (MRIT). Land in Perth and environs valued at above $250,000 are taxed at a flat rate of 0.18%, in addition to the general land tax imposed.

The W.A Office of State Revenue website states, “The issuing of the 2008/09 land tax notices was delayed due to a review of the land tax rates by the new government. The first assessment notices issued on Wednesday 19 November 2008 and further notices will be progressively issued over the next couple of months. It is expected that most assessment notices will have issued by the end of January 2009.”

Northern Territory:
The Northern Territory Government at this stage does not impose land tax on land owners.

In some instances when Partnerships, Companies, Trusts and other entities are involved, the land tax obligations can be quite complex.

Please consult your accountant for further information.