Yet another tax for property owners

Is the Queensland Government in overreach in attacking property investors?

One would think so based on their latest attempt to increase property-related taxes.

The Queensland Revenue Office has introduced legislation that from 30 June 2023, will calculate land tax, using the total value of your Australian land.

This includes your taxable land in Queensland as well as any relevant interstate land you own.

Prior to the changes, land tax in Queensland has been calculated on the value of landholdings owned within Queensland only if the value of those landholdings exceeds the tax-free threshold ($600,000 for individuals other than absentees and $350,000 for companies, trustees, and absentees).

However, under the new framework, land tax will now be calculated on the total value of all land owned by that taxpayer throughout Australia.

Now if you only own land in Queensland you will not be affected by this change, but if you own land in Queensland and in another state or territory, you will need to declare your interstate landholdings.

And these changes apply to individuals, trusts, and companies and are a significant change in the Australian land tax regime.

Why this extra tax?

Apparently, it’s a response to missing out on what would be a revenue source had the Queensland property owner purchased Queensland land and therefore also added to Queensland stock.

The Government argues that the land tax is in substitution for the land tax that would have applied if the land was located in Queensland.

Don’t despair

The good news is there are some strategies available that may reduce or eliminate this double taxation.

It is now more critical for property investors looking to buy in Queensland to have a thorough and detailed Strategic Property Plan which also looks at land tax, asset protection, structures, finance, estate planning, and taxation to ensure they maximise the benefits of their property investment so as to achieve their desired goals.

The onus will be on the Queensland land owner to accurately register and declare each parcel of interstate land and this will be needed for land owned on 30 June 2023.

You will have to know the value of each parcel of land using the most recent values.

Like any taxes, there will be penalties for inaccuracies and it is self-assessed so you must be on top of this before you contemplate your next Queensland land purchase.

Many property owners have diversified the geographic location of their purchases to manage land tax, spread the cycle, and stretch their buying power.

The major reasons for diversification are still valid even though the land tax legislation has changed.

Good planning can reduce and, in some cases, eliminate double taxation so seek professional advice from a wealth strategist that has extensive property and taxation knowledge.

Especially as other jurisdictions will probably start looking at these changes with much interest.

About Ken Raiss Ken is director of Metropole Wealth Advisory and gives strategic expert advice to property investors, professionals and business owners. He is in a unique position to blend his skills of accounting, wealth advisory, property investing, financial planning and small business. View his articles