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Queensland Land Tax Reform Struck Down
Last week, the Queensland premier Annastacia Palaszczuk abandoned the proposed Queensland Land Tax reform following significant industry pushback.
Queensland was set to implement new legislation affecting the land tax of Queensland landowners. The change was set to take effect 30 June 2023 and would have significantly increased the annual land tax liability of Queensland landowners.
Currently
Currently, Queensland land tax is calculated based on the value of all Queensland land which is not exempt from land tax. Land which is exempt from land tax includes:
- land held by individuals with a value of $600,000.00 or less; or
- land held by companies, absentees, or trustees with a value of $350,000.00 or less.
Crucially, Queensland landowners are not currently assessed on the value of land held outside of Queensland.
What was proposed?
Under the proposed reform, from 30 June 2023 land tax for Queensland homeowners would have been assessed based on all land held across any State in Australia. These changes would have seen landowners with land in multiple States, including Queensland, pay significantly higher land tax.
Calculations
Under the proposed reform, land tax liability would be calculated as follows:
- calculate the total value of taxable land owned in all of Australia;
- calculate the Queensland land tax liability of the all the taxable land held in Australian as if it were all held in Queensland;
- calculate the percentage of the total taxable land which is owed in Queensland only; and then
- multiply the total calculated land tax liability by the percentage of Queensland land.
Example
For example, Stephanie owns land in Australia with the following taxable value:
- Queensland $750,000.00
- New South Wales $550,000.00
- Victoria $300,000.00
Stephanie’s land tax liability as of 30 June 2022 is calculated only on the $750,000.00 land value in Queensland and totals $2,000.00 for the year.
Under the reform, as of 30 June 2023, Stephanie’s land tax liability would be calculated as follows:
- Total value of taxable land = $1,600,000.00 = ($750,000.00 + $550,000.00 + $300,000.00)
- Land tax payable on total value of taxable land = $14,400.00
- Percentage of Queensland property = 46.875% = ($750,000.00 / $1,600,000.00) x 100%
- Land tax payable = $6,750.00 = $14,400.00 x 46.875%
Following the land tax reform, Stephanie’s land tax would increase from $2,000.00 to $6,750.00 per annum.
Concerns over the Reform
Amid the rising RBA cash rate, the proposal sparked panic across the property industry. The main concern being that Queensland landowners would suffer a double jeopardy on land tax for any interstate land.
To continue with the above example, Stephanie would not only pay a significantly higher land tax in Queensland based on the taxable value of her properties in New South Wales and Victoria, but also pay separate land tax in those States.
The proposed reform received significant industry pushback as it was seen as an unfair money grab by the Queensland Government. Significantly, the NSW premier, Dominic Perrottet, announced he would not be providing the Queensland Government with information on the property ownership status of NSW residents.
Benching the Reform
The Queensland Government has again received considerable backlash last week over benching the proposal. The concern is that the failure of the Queensland Government to follow through with the scheme earmarks yet another tax break for the wealthy.
Amy MacMahon, the Greens MP for South Brisbane, criticised the Queensland Government’s misplaced focus on protecting the pockets of the wealthy amid rising homelessness and the housing crisis.
Moving Forward
With criticism on either end, the proposal has been benched for the near future. However, the proposed reform remains a strong indication of the direction the Queensland Government is headed with respect to tax implications on the wealthy.
But for the pushback from the property industry, Queensland homeowners would be suffering considerably higher land tax liability. However, should the Queensland Government continue to bow to industry pressure, future reforms are unlikely to succeed.
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