Queensland govt imposes new land tax law

If you thought bill shock was a feature of the energy pricing industry, just wait until you get your new land tax bill from the Queensland government in June 2023! In Part one we will be reviewing the new changes to land tax law.

In Part two we will explore, exemptions, tax free thresholds and setting up an online Queensland Revenue Office (QRO) account.

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.

The new laws change how land tax will be assessed for individuals, companies, trustees and absentees who own land both in Queensland and interstate.

But wait there is more….

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.

Queensland is the only jurisdiction to introduce this type of aggregation rule to include Australia-wide holdings. With inflationary pressure, interest rates on the rise, will this measure spell the end of the Queensland property investment market.

And who are the real victims? Rents will skyrocket in a market where there is already a lack of supply and investors will have to weigh up the added costs. Strap in and let’s ride this roller coaster!

Interstate properties and land tax

From 30 June 2023, when land tax is calculated, the total value of your Australian land will be assessed.

Relevant interstate land includes land located in another state or territory that is valued under interstate valuation legislation and is not excluded interstate land.

The total value of your Australian land will be used to determine:

• whether the tax-free threshold has been exceeded
• the rate of land tax that will be applied to the Queensland proportion of the value of your landholdings

The current tax-free thresholds are $600,000 for individuals (other than absentees) and $350,000 for companies, trustees, and absentees. You’ll only pay tax on the land you own in Queensland**

**Editors Note. The Queensland government contends that you are only paying land tax for the property you own in Queensland. Read on and make up your own mind.

Calculating land tax with interstate land

The land tax rate that applies depends on what type of owner you are and the value of your land. This rate (and surcharge, if applicable) is applied to the total value of your Australian land. Then this figure is applied to the Queensland portion to get the annual land tax liability.

 Example – Queensland Government

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

We will issue an assessment notice for $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 Method.  $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)).

We will issue an assessment notice for $8,422.37.

Source: https://www.qld.gov.au/

Setting up an online account and making a declaration.

You’ll need to set up a QRO Online account and complete the declaration, including land description, value and percentage of ownership. We will be adding more information in our next article

Surcharge

If you are an absentee or a foreign company or trust, a surcharge of 2% is added when calculating land tax. This applies to the total value of your Australian land.

Practical implications

As the full force of the changes will not be felt until 2023, it is difficult to say how this will impact on investment habits or holdings in Queensland.

So after this, do you still want to own investment properties in Queensland? We believe that Queensland provides strong potential for property investors. If you would like to discuss, property investment and tax planning, please feel free to contact me to discuss.

I would love to hear your comments about this cash grab by the Queensland government. Please post your comments below.

We offer a 15-minute free consultation to discuss your tax, property investment and business needs. Book your complimentary consultation now.

Book Now

General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Investax, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.