Land Tax Issues for Landowners in Queensland – What Advisors Should Have on Their Radar

Taxation and Revenue, Residential Real Estate and Projects

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DATE PUBLISHED: February 1, 2021

Land tax bills may come as a shock to some landowners (particularly with the postponement of assessments due to COVID-19). Proper compliance with the legislation and being aware of changes to the ownership and use of the land can assist in ensuring that a landowner’s land tax bill is correct and preventing shock when assessments arrive.

This article covers some land tax matters that advisers and landowners in Queensland should be aware of, including when steps can be taken to make sure that you are not overpaying land tax.

5-step land tax home exemption decision tool

Find out if you are eligible for a land tax home exemption in 5 easy steps.

ISSUE 1 - COVID-19 POSTPONED ASSESSMENTS

As part of the COVID-19 measures introduced in 2020, the Queensland Government automatically delayed issuing all land tax assessments for the 2020-21 year. As a result of this, landowners with a land tax liability have had their liability deferred for at least three months.

Landowners who are anticipating that they will have a land tax liability assessment for the 2020-21 year should be keeping an eye out for their assessments so that they avoid unpaid tax interest or penalties for late payment.

ISSUE 2 - LAND TAX VALUATIONS

Where a landowner is liable for land tax, the land tax liability is calculated based on the value of the land owned by the landowner.

The value of a landowner’s land is determined annually by the Valuer-General of Queensland, who generally issues annual valuations to landowners before 31 March each year.

On occasion, maintenance valuation notices may also be issued that may alter the valuation of land.

Where either an annual valuation notice or a maintenance valuation notice is issued, the landowner has 60 days from the date of the issue of the notice to lodge an objection to that valuation. 

To lodge an objection the landowner must have evidence that supports a position that the valuation is not correct or that an inappropriate valuation method has been used. 

Landowners often disregard the valuation notices. However, they should be aware that the 60 day time frame for objecting to valuations will have expired by the time that a land tax assessment notice is issued.

As such, if the landowner disagrees with the land tax assessment on the basis of the land tax valuation, the landowner may have little recourse to dispute the assessment. For this reason, landowners should review their land valuation notices carefully and take action quickly if they believe the valuation is incorrect.

ISSUE 3 - CHANGE OF USE OF A PROPERTY THAT WAS A HOME

If a landowner has previously lived in a property as a home (and claimed a home exemption) but ceases to do so (e.g. the property is rented), the entitlement to the home exemption for land tax will end.

There is an obligation to notify the Office of State Revenue (OSR) of the change of use of the land so that land tax can be reassessed. This will generally mean that a land tax assessment may follow if the relevant threshold is breached.

If, however, a rented property starts to be used as a home, an exemption for land tax may be available for the period that property was used as a home.

Refer to our free Land Tax Home Exemption Decision Tool, which runs through the factors you should consider in determining whether land may be eligible for the home exemption for land tax.

It is a landowner’s responsibility to inform the OSR if a land tax assessment is not correct, including if the home exemption has been applied incorrectly. The OSR’s data matching abilities are getting more and more sophisticated so landowners shouldn’t expect that the OSR will simply not find out.

ISSUE 4 - NOT AN AUSTRALIAN CITIZEN OR PERMANENT VISA HOLDER AND MOVING OVERSEAS?

Where an individual landowner is not an Australian citizen or permanent visa holder and the individual moves so that they are ordinarily living outside of Australia, a different rate of land tax applies to the land they own in Queensland.

In particular, land tax will be imposed at the rate for ‘absentees’, which is higher than the standard rate of land tax that applies to individuals.

Additionally, a surcharge is applied to land owned by absentees. For the year ended 30 June 2021, the surcharge is 2% and it is applied to the taxable value of land owned by the landowner that exceeds $350,000. That is:

Absentee surcharge = (taxable value of land owned by the absentee - $350,000) x 2%

The Queensland OSR requires that landowners complete their ‘absentee/resident status declaration’ form LT16. 

We can assist landowners to determine whether they would be considered to be absentees and assist with preparing any necessary documentation for the OSR.

Please note, where the OSR is not notified by landowners, they may seek to impose penalties upon discovery of a change of circumstances.

ISSUE 5 - LAND OWNED BY A TRUST

Trusts are subject to a different (higher) rate of land tax than individuals. However, in some circumstances, trustees can apply for the home exemption from land tax.

Broadly, the home exemption for land held by a trustee of a trust requires that all the beneficiaries of the trust use the land as their home. We recommend that beneficiaries and trustees of trusts, where the beneficiaries are living on land owned by the trust, consider whether the home exemption may still be available to them.

Please note that trustees of foreign trusts cannot apply for the land tax exemption.

To access the home exemption for land owned by a trust, trustees can apply via OSR online or by completing Form LT13, available on the Queensland Governments' website.

HOW CAN WE HELP YOU?

McInnes Wilson Lawyers can help you by:

  • advising on land tax liabilities, including the ability to access exemptions from land tax;
  • assisting with applications to the Queensland Office of State Revenue for exemptions from land tax; and
  • liaising with the Queensland Office of State Revenue on land tax matters.

If you require assistance or any further information please contact Taryn Hartley.

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