Main Points Considered A New Zealand Citizen living in Australia, do they qualify for the First Home Owners Grant (FHOG) Also, can they qualify for the First Home Owners Stamp Duty Concessions What if they rent out the spare bedroom to help pay the mortgage? Scenario...
Queensland Land Tax Shock may await Absentees and Trustees
Land Tax Shock is a real concern, particularly with individuals working overseas for a number of years and being deemed Absentee for land tax assessments.
What is Land Tax?
- Land Tax is a state based tax calculated on the freehold land value (Taxable Value) you own in Queensland as at midnight the 30th June each year.
- Qld Valuer-General provides statutory land valuations for all rateable properties across Queensland in accordance with the Land Valuation Act 2010.
- The Rateable land value can be seen on each respective properties rates notice.
- Once your aggregate land value exceeds the threshold, you will be subject to land tax.
Ownership Interest Types
- Individual ownership
- Absentees – non residents -either working overseas for an extended time, or foreign investors.
- Trustees or Company Holdings
Land Tax Thresholds per Interest Types
Individuals
1. Total taxable value | Rate of tax |
$0–$599,999 | $0 |
$600,000–$999,999 | $500 plus 1 cent for each $1 more than $600,000 |
$1,000,000–$2,999,999 | $4,500 plus 1.65 cents for each $1 more than $1,000,000 |
$3,000,000–$4,999,999 | $37,500 plus 1.25 cents for each $1 more than $3,000,000 |
$5,000,000 and over | $62,500 plus 1.75 cents for each $1 more than $5,000,000 |
Example:- Taxable land value of $680,000 as individual.
Total taxable value of $680,000
Tax band is $600,000–$999,999.
Tax calculation = $500 + (1 cent × $80,000 excess)
= $500 + $800
Tax payable = $1,300
Companies & Trustees
Total taxable value | Rate of tax |
$0–$349,999 | $0 |
$350,000–$2,249,999 | $1,450 plus 1.7 cents for each $1 more than $350,000 |
$2,250,000–$4,999,999 | $33,750 plus 1.5 cents for each $1 more than $2,250,000 |
$5,000,000 and over | $75,000 plus 2.0 cents for each $1 more than $5,000,000 |
Example:- Taxable land value of $680,000 as a Trustee or Shareholder in Company
Total taxable value of $680,000
Tax band is $350,000–$2,249,999.
Tax calculation = $1,450 + (1.7 cents × $330,000 excess)
= $1,450 + $5,610
Tax payable = $7,060
Absentees for Land Tax
If you do not usually live in Australia or an external territory, you may be an absentee for land tax purposes.
As an absentee, you are liable for land tax if the total taxable value of your freehold land at 30 June is $350,000 or more.
The land tax rates for companies, trustees and absentees (and from 2017–18, the absentee surcharge of 1.5%) will apply to the land you own.
Similar to other types of owners, you will be assessed only on the land you own, which includes the value of your share in any land owned with others.
Example:- Taxable land value of $680,000 as an Absentee
Total taxable value of $680,000
$7,060 as per rate for company or trustee, plus
$4,950 as per rate 1.5% absentee surcharge
$12,010 Total Payable
How is Land Tax Calculated?
Qld Depart of State Revenue will collate all the land you own in Qld as at the 30th June 2017 to determine if you are subject to land tax.
Land may be owned in various entities – as an individual, as a trustee of a trust, or in the name of a company you own via your shareholding in the company.
Once the land values exceed the relevant thresholds for the relevant entity type, Qld Government will issue a land tax assessment notice, which may come as a shock for the first time.
Example of Multiple Ownership interest
Mary owns various land holdings in Qld as at the 30th June 2017 as following –
- Individually Mary owns land with a taxable value of $500,000 (representing two rental properties owned in her personal name
- As Trustee for the Mary Property Family Trust with a separate taxable value of $700,00 (presenting a number of commercial shops)
- As a director and shareholder in a company with land holdings – Mary Property Holdings Pty Ltd, Mary’s shareholding is 50% of the company, with the land taxable value of $1,100,000, of which Mary will be accountable for $550,000, being her 50% interest in the company.
- Mary’s Land Tax Assessment for 2017-18 will be as following
- Individual land holdings are below the individual threshold, so no land tax.
- In the trust, as the land value is above $350,000 land tax threshold, May will receive a Land Tax Assessment for the Trust of $7,400.00
- Mary’s Property Holding Pty Ltd land value is also above $350,000 will also receive a Land Tax Assessment of $4,850.00
Tax Planning to Consider
- Keeping individual land holdings below $599,000, mindful of allowing for increases in land values. Expensive to transfer land holdings to others, will be subject to stamp duty.
- Consider limiting land holding to1 or 2 residential properties in the Brisbane Area, particularly if they have a high land value.
- Consider buying units or apartments, as they have much lower underlying land value for land tax.
- Consider buying extra land holdings in the name of a Trust; however be aware of the lower threshold of $349,000 versus $599,000 for individuals.
- Consider investing in landholdings in other states to allow for fresh land tax thresholds.
If you would like further information to structure future and current land holdings please contact our office.
Australian Homeowner Moving Overseas and Selling Their Principal Place of Residence (PPR) – Avoiding a $295,200 CGT Bill
Principal Place of Residence Exemption Loss if Sold While Overseas Summary of how the Principal Place of Residence (PPR) Exemption is impacted by moving overseas. When Australian homeowners move overseas and become non-residents for tax purposes, selling their...
Investment Property Capital Gains Tax (CGT) Calculation with PPR Transition
Having an investment property prior or posted to it being a principal place of residence has tricky CGT Calculations. Capital Gains Tax (CGT) is an essential consideration for property owners when selling a property used for different purposes over time. This blog...
Understanding Land Tax in Australia
Picture of a vacant block of land to illustrate it may be subject to land tax What is Land Tax? Land tax is a state and territory-imposed tax on the unimproved value of taxable land owned by individuals, companies, and trusts. It is calculated annually based on a...
Tiny homes have excellent rental yields, income streaming and tax minimisation strategies. How do they compare to a Granny Flat?
What are the tax and investment considerations for a Granny Flat above versus a Tiny Home below? Income Tax Return Reporting - Income Streaming Tiny Homes Tiny home ownership does not have to follow the ownership interest of the underlying property ownership. For...
Easier for Victoricans to build Granny Flats from December 2023.
Secondary Dwelling From December 2023 the Victorian Government has passed planning changes to make it easier to build Granny Flats - or "small secondary dwellings", on existing homes. The Victorian Premier Jacinta Allan revealed that planning permits will no longer be...
Property Investors to ensure income and expenses are correct.
The ATO is particularly targeting property investors that are not using the help of a specialist property tax accountant like Umbrella Property Accountant, due to the high error rate being discovered from ATO Audits. The ATO Audits into self-preparers have uncovered...
Residential Rental Caps & Vacancy Taxes will help supply for tenants?
Gold Coast - Example of the Housing Rental Competing Forces Many Apartments are sitting empty most of the year, including an entire beachfront tower. Gold Coast mayor Tom Tate cited an entire high-rise sitting empty in the triple tower Jewel development at Surfers...
Victorian Labour Government Land Tax Hikes to push up Rents
Victoria was the most locked-down state in Australia, if not the world during Covid, resulting in the Victorian Government accruing over $30 Billion in debt to keep the doors closed. Victorian Statement Government wants to raise $8.6 Billion over the next 4 years by...
Joint Venture(JV) Tax Considerations for Property Developers
Joint Venture tax understanding for property developers in Australia Joint Venture Agreement What is a (JV) for Property Development A joint venture (JV) is a cooperative agreement between two or more parties in which all parties contribute their resources (such as...
Labor Targets Housing with ‘Shared Equity Scheme
A federal Labor government would deliver a $329-million help-to-buy scheme, providing 10,000 Australians with a government guarantee of up to 40 per cent on new homes or 30 per cent on existing homes with a two per cent deposit.