Land tax is only payable in relation to investment or commercial properties and is calculated on a “sliding scale” on the basis of the total taxable site value of all land owned (by an owner or a group of owners) which exceeds the tax-free threshold ($353,000 in 2017/18 financial year). As a result of the 2007 State Budget certain changes were made to the Land Tax Act 1936 that effect all land holdings subject to land tax with multiple owners.
To calculate liability for land tax use the table below.
Land Tax Calculator
The changes introduced anti-avoidance provisions into the Land Tax Act 1936 to “address the practice where owners of more than one piece of land avoid paying higher marginal rates of land tax by structuring their ownerships so that another party (or parties) hold a small minority interest in an individual piece of land thereby creating different legal ownerships. The anti-avoidance provisions enable the Commissioner of State Taxation to ignore any minority interests in land that are 5 per cent or less unless the Commissioner is satisfied that there is no doubt that the interest was created solely for a purpose or entirely for purposes unrelated to reducing the land tax payable in respect of that, or any other, piece of land. If there is a legitimate reason for placing any very small interest in the ownership of another person or entity the parties will be able to satisfy the Commissioner of that fact.
Where a minority interest is greater than 5 per cent the provision will not apply unless the Commissioner forms the opinion that the purpose or one of the purposes for which the interest was created was to reduce land tax. The Commissioner has no interest in attempting to aggregate holdings where there are legitimate reasons for the holding to be structured in that manner.
Landlords of commercial property should be aware of legislative restrictions to adding land tax to outgoings payable by tenants. See our article: ‘Land Tax Not Payable by Tenant if Act Applies‘
For further information please contact Danny on 8362 6400 or email Danny Beger. Join our mailing list to receive updates and advice on current issues.