Changes to the Land Tax Act 2010 (QLD) could lead to a significant increase in tax liability for anyone who owns land in both Queensland and other states or territories.
From 30 June 2023, the Queensland Government will calculate land tax based on the total value of Australia-wide landholdings (including taxable land in Queensland and relevant land in another state or territory) pushing those land owners into a higher land tax bracket.
The total value of 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 landholdings.
The current tax-free thresholds are $600,000 for individuals (other than absentees) and $350,000 for companies, trustees and absentees.
Calculating Land Tax with Interstate Land
The land tax rate will depend upon what type of owner you are and the value of your land. The rate (and surcharge, if applicable) will be applied to the total of your taxable land located in Queensland and the statutory value of interstate land. This figure will be applied to the Queensland portion to get the annual land tax liability.
To demonstrate the potential tax increase for interstate landowners, please take a look at the example below:
On 30 June 2022, Joanne owns one property in Queensland with a taxable value of $745,000 and she also owns property in Sydney with a statutory value of $1,565,000.
- Using the current rates for land tax, Joanne would receive an assessment notice for $1,950 for the 2022/23 financial year – based on the QLD Property only.
- Under the 2023/24 system, Joanne’s land tax will increase to $8,422 with the revised levy adding the Sydney property into the land tax calculation.
How the new land tax will be calculated:
The total taxable value of Australian land owned by Joanne in 2022/23 is $2,310,000, as such, she will be calculated using the higher rate for individuals.
$4,500 + (1.65 cents × $1,310,000) = $4,500 + $21,615 = $26,115.
This amount is then applied to the Queensland portion of Joanne’s land
($745,000 ÷ $2,310,000) × $26,115)) with a 22/23 assessment notice of $8,422.37.
From 30 June 2023 the amendments to the Act require that if you own land in both Queensland and another state, you will need to declare your interstate holdings via QRO within 30 days of receiving a land tax assessment notice or before 31 October – whichever occurs earlier.
If you only own land in Queensland, you will not be affected by this change and will continue to be able to access all available exemptions.
The increased tax liability in Queensland does not impact any taxes payable in other States and Territories. However, based on the reaction to these revised land tax calculations, other states may introduce similar reforms in the future. Landlords and Leasees should carefully check the wording in current and future leases to check land tax recovery inclusions.
If you have any questions regarding your land tax requirements, please get in touch.