From 30 June 2023, the way Queensland Land Tax is calculated will change. What is changing, what is not changing, and who will this affect? For answers to these questions and more – read on.
What is land tax?
Land tax is a state tax and currently calculated on the freehold land you owned in Queensland as at midnight on the 30th of June. Most Queensland landowners are not liable for land tax because either the freehold land is exempt or because the value (based on your annual land valuation issued by the Valuer–General) of their non-exempt freehold land in Queensland at 30 June is not greater than the tax-free threshold.
What is changing?
Effective, at the stroke of midnight 30 June 2023, the total value of ALL your non-exempt Australian freehold land will be used to determine:
• whether the tax-free threshold has been excluded
• the rate of land tax that will be applied to the Queensland proportion of the value of your landholdings.
Translated into practice, this means that Queensland landowners will still be taxed on the value of their Queensland landholdings, but in determining the ‘rate’ of land tax that they will pay, the statutory value of their ‘Australian land’ will be used. This brazen move will push some Queensland landowners into a higher land tax bracket. These changes will apply for the land tax year commencing 1 July 2023 and subsequent land tax years.
To calculate the amount of land tax payable under the changes, is a 3-step process:
• Step 1: Calculate the total value of Australia land owned;
• Step 2: Calculate the land tax as if all of that land is in Queensland and;
• Step 3: Apportion the amount (calculated under step 2) to the Queensland land based on its proportion of your total value (calculated under step 1).
What is not changing?
The tax-free threshold is still the same – $600,000 for individuals (other than absentees) and $350,000 for companies, trusts, superannuation funds and absentee owners.
What is exempt land has not changed either. If land was exempt land previously, it is still exempt land now.
And finally, the rate of tax for the different taxable value brackets, remains the same.
Who will this Affect?
If you only own freehold land in Queensland, the changes will not affect you.
The changes will only affect Queensland landowners who also own non-exempt land interstate. The amount of land tax that will be payable post 30 June 2023 will be higher, as the tax will be based on the total value of all non–exempt freehold land in Australia and not just the value of non-exempt freehold land in Queensland (which was the previous position).
From 30 June 2023, Queensland landowners will need to declare their interstate landholding to the Queensland Revenue Office on or before 31 October or within 30 days of receiving a land tax assessment notice.
Recoupment of Costs
While precise details on what the Land tax changes are expected to add to the State Budget have not been advised, budget forecast figures from the 2021-22 budget update show a large increase in revenue. This revenue is an extra cost imposed directly on landholders.
Under Residential Tenancy Leases and Retail Shop Leases, property owners cannot recover land tax from the tenant. Whether the costs can be recoup from the tenant under other leases depends on the lease in place. Legal advice will need to be obtained.
Queensland landowners holding non-exempt freehold land in Queensland only, are not affected by this change. Where non-exempt freehold land is also held interstate, Queensland landowners should start planning now for the extra land tax they will be liable for from 30 June 2023.
Who knows what the other States will do as well. To find out more about how we can help you with the Queensland Land Tax changes, reach out to us via email or call 07 3221 5677.
By Murray Reiha CPA Accountant at Walshs