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Queensland land tax changes go further than first anticipated.
Queensland Land Tax Changes
It was meant to only hit interstate land owners, but now it is hitting everyone owning land in Queensland – whether from interstate or a Queenslander.
In this update Emily Pritchard of ACIS will walk you through the changes affecting you and your clients with land in Queensland. Here is what we learned but please listen in as Emily explains all this much better than we ever could.
To listen while you drive, walk or work, just access the episode through a free podcast app on your mobile phone.
Fundmental Shift
Queensland land tax is changing from 1 January 2023. But since land tax is based on land holdings as of 30 June, this change won’t hit you until you do your land tax for the 2024 tax year. Queensland says that this change is to ‘close a loophole’.
The 2022 Queensland budget in December 2021 was the first to mention this upcoming change. And at that stage the promise was that this would only affect interstate landholders, but no Queenslanders. But this is no longer the case. It affects anybody with landholdings in Queensland and another state.
The new law passed on 24 June 2022. For a new law that is pretty quick, if you consider that the first announcement was in December 2021.
Being tough on land tax is new for Queensland. So far Queensland had been quite gentle, especially when you look at land tax values – pretty low compared to actual market values. So this is an unusual first – a fundamental shift in the other direction. And no other state has draconian rules like this – yet.
Until 30 June 2023
For the Queensland land tax year ending on 30 June 2023 – any person or entity owning land in Queensland calculates their Queensland land tax as of 30 June based on their Queensland landholdings only. So you could have a crazy number of properties elsewhere in Australia – only your Queensland properties would go into your calculations for Queensland land tax.
From 1 July 2023
From 1 July 2023 all this changes. From that point onwards, Queensland will calculate its land tax based on your Australian wide landholdings as of 30 June before the start of the land tax year. So it will be the total of your taxable land in Queensland and interstate as of 30 June.
‘Hold on a minute’ you might say. ‘Why is Queensland collecting land tax on land in other states?’ They don’t. The land in other states just goes into the calculation, but it doesn’t attract land tax as such.
This is all about thresholds and rates. The more land you have, the quicker you max out your thresholds and the higher the tax rate you pay. Queensland Revenue will use the total value of your Australia-wide landholdings to determine whether you have exceeded the tax-free threshold and what tax rate to apply.
Landholders are only taxed on land in Queensland, but the land held outside of Queensland will determine how the tax on those Queensland properties is calculated.
This change won’t affect entities only holding land in Queensland. But will affect those with land in both Queensland and interstate.
How It is Now
Let’s say you own land in Queensland and Victoria with a taxable value of AUD 745,000 and AUD 1,565,000 respectively. Under the current regime until 30 June 2023 your Queensland land tax would be AUD 1,950. Your tax-free threshold would be AUD 600,000, so just AUD 145,000 go into your land tax calculation.
= (AUD145,000 x 1 cent) + AUD 500
= AUD 1,450 + AUD 500
= AUD 1,950
How It Will Be
Now let’s assume it is the 1st of July 2023 – you still have the same landholdings in Queensland and Victoria of AUD 745,000 and AUD 1,565,000 respectively – but now the new rules apply. And now your land tax changes from AUD 1,950 to AUD 8,422.37. And this comes as follows.
Your total Australian land value is still AUD 2,310,000 – no change there. But now your hypothetical Queensland land tax on this total portfolio of AUD 2.31m would be AUD 26,115.
= AUD 4,500 for the first AUD 1m + (1.65 cents × AUD 1,310,000)
= AUD 4,500 + AUD 21,615
= AUD 26,115
That amount is then pro-rata applied to the Queensland portion of your land holdings, giving you a land tax liability of AUD 8,422.37. That’s quite a change when you consider that in the previous year your land tax was only AUD 1,950.
(AUD 745,000 / AUD 2,310,000) × AUD 26,115) = AUD 8,422.37
Disclosure
The obligation is on you as the landholder to declare your interstate landholdings to the Queensland Revenue Office. So if you or your entities own land in Queensland as well as anywhere else in Australia, you need to declare your interstate landholdings to the Queensland Revenue Office. You do this as an online declaration on the QRO website.
Do this by the earlier of:
- Within 30 days of receiving the assessment;
- On or before 31 October 2023
So 31 October 2023 is your deadline. And going forward, if you as a landholder become aware of a new value for your interstate land, you need to tell the Queensland Revenue Office.
The system relies on voluntary disclosure with penalties for no compliance (about AUD 15,000), but at the beginning there will probably be some leeway.
Will Other States Follow?
Remember how foreign person surcharges for duty and land tax started in one state and slowly seeped into other jurisdictions? In a similar fashion, we might see other states follow Queensland’s lead on this one.
Restructure
Use the next few months to restructure your landholdings to mitigate your increase in land tax. But consider stamp duty. Make sure the restructure doesn’t cost you more in stamp duty than you will save in land tax.
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Disclaimer: Tax Talks does not provide financial or tax advice. All information on Tax Talks is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 20 September 2022
Tax Talks spoke to Emily Pritchard - Legal & Client Services Director at Acis. - for more details.
