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Revised levy adds interstate holdings into land tax calculation.
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Queensland to slug landowners Australia-wide
21 July 2022
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Landowners Australia-wide could face a tax bill from Queensland next year if their holdings include property in the state even if sits below the current threshold for the levy.
Changes to the way Queensland calculates that threshold will take in interstate holdings from 30 June 2023, meaning a taxpayer in NSW with sub-threshold land on both sides of the border could face a land tax bill for the first time.
The general manager of technical policy at the IPA, Tony Greco, said awareness of the measure, flagged last December and inked in the recent state budget, was low and most investors would be surprised by their next land tax bill.
He said Queensland was “pulling the trigger” and other states could follow suit.
“Queensland is the only jurisdiction to introduce this type of aggregation rule to include Australia-wide holdings,” he said.
“From next year, an owner’s liability for land tax will be determined based on the total value of their Australia-wide landholdings that are not exempt, rather than solely on their non-exempt Queensland landholdings.
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“This value will be used to determine whether the owner has exceeded the tax-free threshold and the applicable general rate of land tax which will ultimately be applied to the Queensland proportion of the value of the Australia-wide landholdings.”
He said it was effectively a tax rate hike for all entities that hold land in Queensland as well as another Australian jurisdiction, with no impact on Queensland-only landholders.
A state government website, updated a week ago, said anyone owning land in Queensland and in another state or territory would need to set up an online account with the Queensland Revenue Office and declare their interstate landholdings.
The website said: “You’ll need to set up a QRO Online account and complete the declaration, including land description, value and percentage of ownership.
“From 30 June 2023, you will need to complete this declaration by the earlier of the following:
- within 30 days of receiving a land tax assessment notice
- on or before 31 October.”
While some land tax exemptions apply to interstate land – for principal place of residence, primary production and charities, for example – other exemptions are Queensland only, such as for land held by societies, clubs and associations. Subdivider and averaging are also unavailable on interstate holdings.
Mr Greco cited two examples to illustrate the change and the potential for unwitting interstate owners to incur tax bills running into thousands of dollars:
- Individual landowner owns land in Queensland with a taxable value of $745,000 and also owns land in Victoria valued at $1,565,000 on 30 June 2023. The land tax bill would be $1,950 for the 2022–23 financial year but under the aggregation of interstate properties changes the land tax bill in Queensland will increase to $8,422 for each of the following years.
- Individual landholder with $599,999 in taxable land in Queensland and $400,000 in NSW would pay no land tax for the FY22–23 as the Queensland landholding is under the exemption threshold. Under the aggregation of interstate properties changes, land tax will be payable in Queensland despite both properties falling under the respective state land tax exemption thresholds. For each following year this individual will be paying $2,700 land tax.
Mr Greco said if landlords passed on this impost to tenants, rents could increase and there was a strong possibility that other states would introduce something similar.
“There are practical difficulties around implementation as there is no uniformity between the land tax rules in each state and territory,” he said.
“Unlike payroll tax where there has been some harmonisation of the rules, the same cannot be said for land tax particularly around exemptions and concessions.
“Also, not all jurisdictions impose land tax. The Northern Territory does not impose land tax for example.”
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