Queensland's Land Tax Changes Shelved - For Now

September 30, 2022 Edward Dever

In a backflip worthy of a competitor at the 2032 Olympic Games in Brisbane, Qld Premier Annastacia Palaszczuk has now ditched the 2023 land tax changes which sought to assess land tax based on land holdings throughout Australia.

Shelved at least for now but perhaps not forgotten.

Earlier this week, the Qld Treasurer Cameron Dick was adamant the changes would proceed.

"It is understood Ms Palaszczuk made the decision on Thursday night to shelve the scheme after speaking to her interstate counterparts."

NSW, NT and Tasmania were not particularly keen to co-operate.

The Qld Treasurer claimed the tax was to close a loophole used by people in Sydney to flip properties in Qld. However, this side stepped the fact that it applied equally to people in Qld who owned an interstate property. The Government's own example of "Lena" on its website related to a person who owned a property in Qld who then buys a property in Victoria.

The Qld Treasurer also claimed that investors use the tax-free thresholds in each State to avoid paying land tax. While this may be the case, he offered no details on how widespread this practice is.

He also stated that rents in Qld would not be affected by the land tax changes. It seems reasonable that any landlord impacted by the land tax changes would have tried to pass at least some of that cost onto their tenants. The timing of the land tax changes, in the midst of a rental crisis, was unfortunate.

The now scrapped changes would have resulted in a person already paying land tax in another State being assessed on that property again by the Qld government. No credit was to be given for the land tax already paid in that other State.

It would be interesting to see the Qld government's evidence that investors use the tax-free thresholds in each State to avoid paying land tax. I would be surprised if land tax avoidance is the primary broad-based reason for interstate investment property decisions. But, if that is the case, perhaps something can be (better) tailored to deal with it.

Qld shelves controversial land tax plan

September 2022

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Qld's 2023 Land Tax Changes - Industry Response

September 9, 2022 Edward Dever

In the past week, much has been said and written about the Qld Government's 2023 land tax changes which will calculate land tax based on the total value of all Australian land (not just Qld land) held by a land owner.

Here is a sample:

Antonia Mercorella, CEO, REIQ - “It is irreconcilable that the Treasury expects to legitimately raise tax on the basis of value of property held outside of Queensland for the purpose of funding infrastructure within Queensland,”

Leisa Rafter, Chair of the Tax Institute’s Queensland committee - “The changes to land tax are likely to increase the compliance costs for taxpayers as well as the administration costs for the Queensland revenue office – there is a potential for the combined compliance and administrative costs to outweigh the revenue collected.”

Hayden Groves, President, Real Estate Institute of Australia - “It’s a dangerous move and if other states see Queensland pulling in revenue from around the country they could follow it. It has never been done before and for good reason.”

"The REIQ has called for repeal of the ‘illogical’ new land tax regime, while the Tax Institute has also warned that the ‘increase in compliance costs may disproportionately impact individual and smaller taxpayers, especially those who reside in other states and now find themselves liable to land tax in Queensland’.”

Qld Parliament resumes next week with the State Opposition calling on the Government to release its modelling on the new tax. The Government is under further pressure from the State Opposition and the Murdoch media to hold an emergency housing crisis summit.

Queensland’s property levy scheme could backfire

September 2022

Will Qld's 2023 Land Tax Changes Drive Away Interstate Investors?

September 7, 2022 Edward Dever

Only time will tell. However, it seems reasonable that a residential property investor with multiple interstate properties and only one or two Queensland-based properties will sell them to avoid the reach of the Qld Revenue Office. (Equally, an investor with predominantly Qld-based properties may sell off an interstate property to avoid a land tax hike.)

If Qld properties are retained, investors are likely to want to increase rents to try to recover some or all of the additional Qld land tax.

Either way, it is likely to exacerbate the already difficult rental climate in Qld. (Not forgetting the Greens plans for nationwide residential rent controls.)

Under the 2023 Qld land tax changes, Qld land tax will be calculated based on:

1. the total of your taxable land located in Queensland. and 2. the statutory value of your interstate land.

Qld land tax is calculated based on the taxable value of Australian land which is then applied to the Qld portion of the land holdings.

The Qld Revenue Office's example has the fictional Lena's Qld land tax bill increasing from $1,950.00 to $8,422.37.

There is no credit given for land tax payable in another State.

It is surprising that it has taken this long for the issue to be picked up by the media and many investors will be unaware of these changes. However, for the moment, the Qld Government is holding firm. Also, once implemented in Qld, how long until other States follow suit?

Fears over land tax changes to include interstate investors’ holdings outside of Queensland

September 2022

Covid-19 Land Tax Relief - How Qld and NSW Programs Differ

September 18, 2020 Edward Dever

Covid-19 has shown that Australia is a collection of States and Territories rather than one nation.

Australia has become a quagmire of different rules for travelling between States. We have seen different rules apply to similar events such as funerals depending on your State.

Land tax relief is another example of State differences.

In Qld, land tax relief is offered to landowners where the ability of the #tenant to pay rent is affected by Covid-19 (and their rent is reduced) and also where the landowner's ability to secure tenants has been affected by Covid-19.

Qld relief is self-assessed. (Subsequent auditing is likely.)

Qld is also extending the relief to the 2020-21 land tax liability (applications close on 26 February 2021).

(Qld Land Tax Relief Measures)

In NSW, relief is offered to landowners whose tenants can prove Covid-19 financial distress and have been provided rent reduction.

No relief is currently provided to landowners where their ability to secure tenants has been affected by Covid-19.

NSW is approval based rather than self-assessed.

Relief is currently limited to the 2020 land tax liability.

(NSW Land Tax Relief Measures)

Qld clearly has the more generous relief program at this point.

Update - 23 September 2020

NSW has now extended its Land Tax relief program until 31 December 2020.
Rental support measures in NSW to be extended for six months

September 2020