Jun

26

Land Tax

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WHAT IS LAND TAX?

Land Tax is a tax levied each year calculated on the aggregate unimproved value of freehold land owned by a person within Queensland as at midnight on 30 June each year.

Land Tax administration and collection is governed by the provisions of the Land Tax Act 1915.

WHO IS REQUIRED TO PAY LAND TAX?

Natural Persons

If you are a natural person, you are liable to pay Land Tax if the total of the unimproved vale of land owned by you as at 30 June 2004 is equal to or greater than $275,997.00.

Companies and Trusts etc

Entities who are not natural persons, such as companies and trusts etc must pay Land Tax if the total unimproved value of freehold land owned by then as at 30 June 2004 is equal to or greater than $170,000.00.

The Office of State Revenue frequently reviews those threshold values.

ARE THERE ANY DEDUCTIONS THAT I CAN CLAIM FOR MY LAND TAX?

Natural Person

If you are a natural person who is a resident of Australia and owns land in Queensland, you will receive a deduction of $220,000.00 from the total unimproved value of land owned by you.

 

Principal Place of Residence and Farming Land

The relevant unimproved value of a person’s principal place of residence is deducted from the total unimproved value of land owned when calculating Land Tax payable. This deduction also applies if a trust owns land and all beneficiaries of the trust occupy a unit or dwelling on the land as their principal place of residence.

The test for the principal place of residence deduction is that you must have used that land, and no other land for residential purposes continuously for a six (6) month period prior to 30 June 2004. You will not be entitled to claim this deduction if you rent, lease or let any part of the land or buildings.

If all or part of your land is used solely for farming, such as agriculture, pasture or dairy farming, you may also be eligible for the principal place of residence deduction.

WHO CAN CLAIM AN EXEMPTION FROM LAND TAX?

Entities such as societies, clubs or associations can apply for an exemption if the business / association is a not-for-profit organization and the land is not rented, leased of let.

REBATES

A natural person is entitled to a 15% rebate on the tax payable.

Companies, trustees and absentees also receive a scaled rebate that is a maximum of 36% if the unimproved value is $170,000.00. This percentage reduces by 0.5% for every $1,000.00 that the unimproved value of the land exceeds $170,000.00 and cuts out at $215,000.00.

WHAT IF I SELL MY LAND DURING THE FINANCIAL YEAR?

There is no pro-rata adjustment on the Land Tax that you are required to pay to the Office of State Revenue if you sell your land during the financial year.

The Real Estate Institute of Queensland Standard Conditions of Contract do make provisions for an adjustment to be made for Land Tax payable at the settlement of the sale of property.

Essentially Land Tax is adjusted on the assessment issued by the Office of State Revenue for that Land Tax year on the basis that the seller is a natural person and a resident in Queensland, and the land was the seller’s only land. If the seller is a company or trust, the effect of this clause is that Land Tax will be payable without the deduction that is a afforded to a natural person, however the company or trust will only be entitled to recover a pro-rata amount from a purchaser calculated as if the Land Tax was paid by a natural person (i.e. with the statutory deduction of $220,000.00 and the rebate of 15%).

The obvious result of this is that a seller who is a company or trustee does not get reimbursed on a pro-rata basis for the actual amount of Land Tax paid.

It is often the case that a corporate or trustee seller will have a special condition added to the contract to amend the Land Tax adjustment clause in the Standard Conditions by deleting any reference to the seller being a natural person.

For the REIQ Commercial Contract, the appropriate special condition would read as follows:

“Clause 15.5 of the Standard Conditions is amended by deleting the words “and was a natural person resident in Queensland.” “

For the REIQ Contract for the sale of houses and land, the appropriate special condition would read as follows

“Clause 2.6(4) of the Standard Conditions of Sale is amended by deleting the words “the seller was one natural person resident in Queensland and…”

WHAT ARE THE APPROPRIATE RATES OF TAX PAYABLE?

Land Tax is assessed on a sliding scale. The rates for 2004/2005 are:

Taxable value                           Tax Payable

Less than $4,000                                                        0.20 cents in each $

$4,000 – $5,999                                                        $8.00 plus 0.36 cents in each $ more than $4,000

$6,000 – $9,999                                                        $15.20 plus 0.52 cents in each $ more than $6,000

$10,000 – $29,999                                                   $36.00 plus 0.70 cents in each $ more than $10,000

$30,000 – $49,999                                                  $176.00 plus 0.87 cents in each $ more than $30,000

$50,000 – $199,999                                               $350.00 plus 1.03 cents in each $ more than $50,000

$200,000 – $349,999                                            $1,895.00 plus 1.20 cents in each $ more than $200,000

$350,000 – $499,999                                            $3,695.00 plus 1.37 cents in each $ more than $350,000

$500,000 – $649,999                                           $5,750.00 plus 1.54 cents in each $ more than $500,000

$650,000 – $799,999                                           $8,060.00 plus 1.71 cents in each $ more than $650,000

$800,000 – $949,999                                          $10,625.00 plus 1.89 cents in each $ more than $800,000

$950,000 – $1,099,999                                      $13,460.00 plus 2.01 cents in each $ more than $950,000

$1,100,000 – $1,249,999                                  $16,475.00 plus 2.23 cents in each $ more than $1,100,000

$1,250,000 – $1,299,999                                  $19,820.00 plus 2.44 cents in each $ more than $1,250,000

$1,300,000 – $1,349,999                                  $21,040.00 plus 2.66 cents in each $ more than $1,300,000

$1,350,000 – $1,399,999                                  $22,370.00 plus 2.87 cents in each $ more than $1,350,000

$1,400,000 – $1,449,999                                  $23,805.00 plus $3.09 cents in each $ more than $1,400,000

$1,450,000 – $1,499,999                                  $25,350.00 plus $3.30 cents in each $ more than $1,450,000

$1,500,000 or more                                            1.80 cents for each and every $

Examples of the Calculation of Land Tax

If a person owned three (3) properties in Queensland, with one being the person’s principal place of residence and with the following unimproved values:

Property 1                     $150,000.00

Property 2                     $200,000.00 (principal place of residence)

Property 3                     $100,000.00

Total                               $450,000.00

This exceeds the threshold of $275,997.00 for a natural person. The taxable value of the land would be calculated as follows:

Total Value : $450,000.00

Less principal place of residence deduction                                         $200,000.00

Less statutory deduction                                                                              $220,000.00

Total taxable value                                                                                          $30,000.00

Using the Land Tax scale above, the total tax payable is $176.00 less the rebate of 15% for a natural person, which brings the total amount payable to $149.60.

At  Ferguson Cannon, we have extensive experience in the purchase and sale of all kinds of property and will be able to assist any owners of land on queries regarding the sale of their property, or Land Tax or other statutory amounts that may be payable with respect to the ownership of that land.

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Category: Business & Corporate Services, Construction Law, Contract Law, Conveyancing, Fact Finders, General, Intellectual Property, Land Law, Property Development

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