The Revenue Legislation Amendment Bill 2022 includes amendments to the Land Tax Act 2010) previously announced in the 2021-22 Budget Update to enable the value of interstate landholdings to be accounted for when assessing land tax payable in Queensland from the land tax year starting 1 July 2023.
This land tax reform is intended to improve the fairness of Queensland’s land tax system by considering total relevant Australia-wide landholdings in determining a landowner’s liability for Queensland land tax. Specifically, the value of total relevant Australia-wide landholdings will be used to determine whether the landowner has exceeded the tax-free threshold and the applicable general rate of land tax that will apply to the Queensland proportion of Australia-wide landholdings.
Currently, land tax is assessed by each state solely based on land owned in that state. The practical effect of the Land Tax Reform is to bring Queensland land into the land tax regime or otherwise reduce the effect of the tax-free threshold in Queensland if land outside Queensland is owned (each of which would increase an owner’s land tax in Queensland).
Under the amendments, the exemptions from land tax under part 6 of the Land Tax Act will generally be available to interstate land in the same way as Queensland land, other than the exemptions for government land, port authority land and friendly societies. For the home exemption, supported accommodation exemption, moveable dwelling park exemption and retirement village exemption, the existing exemptions are not currently broad enough to apply so equivalent requirements that align with the existing exemption requirements have been included for interstate land.
While every case will be different, we do see some inequities which are likely to play out including in the following circumstances:
- The reduction of the Queensland tax-free threshold occurs regardless of whether a tax-free threshold is available in another state. For example, a discretionary trust which holds land in New South Wales is not entitled to a tax-free threshold in New South Wales. Regardless, that land may also cause the Queensland tax-free threshold to be exceeded, and its effect reduced.
- The Queensland Commissioner has relatively wide power to determine the value of interstate land (which could be different from the value determined by the interstate government), with limited rights of appeal. In addition, it would seem that a successful objection to land value in another state does not necessarily require the Queensland Commissioner to adopt the revised valuation for the purposes of assessing land tax in Queensland.
- The relevant land taxing dates differ among the states. If ownership of interstate land is held on the Queensland taxing date, it could still affect the Queensland land tax assessment even if the land is not held on the interstate taxing date.
- While attempts have been made to align the various jurisdictions’ exemptions, whether they address all potential anomalies would need to be further considered on a case-by-case basis.