After writing this article, the Queensland government announced on 30 September 2022 that the land tax changes have been shelved.
The Queensland Government has recently legislated changes to Queensland land tax rules, which potentially increases land tax payable by Queensland landowners who also own land interstate.
Queensland land tax is potentially payable on land owned in Queensland at midnight on 30 June each year. The land tax payable depends on the type of property owner you are (individual, company, and trustee) and the total taxable value of land owned. You are exempt from paying land tax on certain land, such as your principal place of residence and on land used for the business of primary production.
Previously, Queensland land tax was only calculated having regard to the value of Queensland land owned. Land tax will now be calculated having regard to the value of both Queensland and interstate land owned.
What are the changes and who is affected?
From June 30, 2023, your land tax calculated in Queensland will be based on the total value of land owned in Australia.
The changes will affect landowners who own land in Queensland as well as other States or Territories in Australia. This change will not affect landowners who only own land in Queensland.
Land tax exemptions, such as principal place of residence and primary production exemptions will not be impacted.
How will the land tax now be calculated?
While landowners will only pay land tax on land owned in Queensland, when land tax is calculated, it will take into account the total value of land owned in Australia.
The total value of Australian land will be used to determine:
- Whether the tax-free threshold has been exceeded (currently $600,000 for individuals (other than absentees) and $350,000 for companies, trustees, and absentees); and
- The rate of land tax that will be applied to the Queensland proportion of the value of landholdings. Land tax rates are progressive and so using the total value of Australian land will push landowners into a higher land tax bracket.
Here are some examples that may apply to you:
Example 1 – Individual now exceeds tax-free threshold due to ownership of interstate land
An individual owns land in Queensland with a taxable value of $500,000 and land in NSW with a taxable value of $800,000. Prior to 30 June 2023, no land tax would be payable as the individual would not exceed the tax-free threshold (taxable value of land held in Queensland being < $600,000). From 30 June 2023, land tax would be payable as the individual’s Australian land would exceed the tax-free threshold.
Example 2 – land tax payable increases due to interstate land
An individual owns land in Queensland with a taxable value of $745,000 and land in Victoria with a taxable value of $1,565,000 (total Australian land value of $2,310,000).
Assuming no changes in value at 30 June 2022 and 30 June 2023, the Queensland land tax payable (no land tax exemptions applying) is:
- 30 June 2022: $1,950
- 30 June 2023: $8,422.37
The increase is because the land tax in Queensland is now calculated by reference to the total Australian land value and higher land tax rates apply to the Queensland land portion (because land tax is calculated on total Australian land value).
For more examples of these land tax changes, and for details on changes to land tax in other Australian states, CLICK HERE
What do you need to do next?
Landowners with properties in Queensland and other States and Territories should consider the impact of these changes from 30 June 2023.
Queensland landowners with land in another State or Territory (being not exempt land) will need to declare their interstate landholdings to the Queensland Revenue Office from 30 June 2023.
Separating land ownership into different special-purpose vehicles or entities will continue to be relevant.
For more information please visit: https://www.qld.gov.au/environment/land/tax/interstate
If you would like further advice on the changes to Queensland Land Tax and how it may impact you, call us to find out how Bentleys’ business advisors can help you to get where you want to be.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.