South Australian Land Tax – distinguishing between what’s proceeding and what’s on ice, together with key dates

The changes to South Australian Land Tax are fast approaching with the new regime coming into effect midnight 30 June 2020.  However, a combination of the bushfire recovery effort and COVID-19 have meant that they will be significantly pared back – this is what you need to know.

Revaluation Initiative Cycle 2 deferred until 2021/2022 Financial Year
Annual General Valuation Proceed as usual
Annual General Valuation Apply from 1 July 2020 unless designated beneficiary is nominated
Reduction in land tax rates Effective from 1 July 2020
Aggregation and grouping Effective from 1 July 2020 but with significant relief for some taxpayers, which have been expanded due to COVID-19

The concessions to ease any adverse impacts of the introduction of the new regime (which have been increased as part of the coronavirus relief package announced on 26 March 2020) include:

  • Transitional relief over three years for eligible taxpayers who have an increase in their land tax assessment as a result of the changes in aggregation of land [see more below]
  • Relief for eligible developers of “affordable housing” [see more below]
  • Ability for residential developers to disaggregate companies that own land that is being held solely for the purpose of being developed as a residential development of more than 10 allotments.

At Grant Thornton, we have specialists who are advising clients on the new regime and are available to provide advice with respect to existing and proposed land-owning structures as well assist in the required dealings with Revenue SA regarding the new portal and beneficiary nomination requirements.

As they are complex, we set out some more detailed of these aspects below.

Key dates:

Importantly for land owned in trusts, Trustees will be subject to surcharge rates of land tax unless a Nomination of Designated Beneficiary is lodged. There are critical dates to be aware of should a Trustee wish to nominate which are outlined below

With respect to land owned by companies, the regime will seek to group related corporations and assess the group as if the land were held by a single corporation.

We expect that Revenue SA is now corresponding with property owners to provide further information on the soon to be launched Land Tax Portal as well as outline key cut off dates for notifications and nominations.

The key dates to be aware of are as follows:

16 October 2019 Pre-existing discretionary trust land cut-off date
Late March 2020 Letter sent to corporate group nominees
1 March 2020 Application community housing land tax exemption opens [see more details below]
30 March 2020 Revenue SA Portal Opens
Early Apri 2020 Letters sent to remaining landowners
April – June 2020 Landowners confirm & upload data
31 July 2020 Last day to provide notice of land held in trust
October 2020 Land Tax Assessment posted/emailed & application for transition fund opens
31 March 2021 Applications for transition fund closes for 20/21 [see more details below]
30 June 2021 Last day to nominate designated beneficiary for a discretionary trust

The Valuer-General announced on 1 April 2020 that she is revising her approach to the Revaluation Initiative.  While the annual General Valuation mass appraisal and revisit program will proceed as usual, she is delaying implementation of Cycle 2 of the Revaluation Initiative this year. In addition, she expects that there will be some changes in property values this year – however their analysis suggests that the majority are modest in nature and are reflective of the circumstances in place as at 1 January 2020.

Reduction in marginal rates

From 1 July 2020 there will be an immediate reduction in the top marginal rate of land tax from 3.7% to 2.4%, an increase in the tax-free threshold to $450,000 and the top threshold to $1,350,000, the introduction of a new tax bracket at 2.0% for total site values between $1,098,000 and $1,350,000 and a reduction in the rate of land tax on land valued between $755,000 and $1,098,000.

Aggregation transitional relief

There is a relief for significant land tax increases faced by taxpayers in the first 3 years of aggregation, with the first year increased as part of the coronavirus relief package announced on 26 March 2020.  The following principles will be used:

  2020/2021 land tax year 2021/2022 land tax year 2022/2023 land tax year
No relief for first $2,500 increase
Increase between $2,500 and $102,500 100% relief 30% relief 15% relief
Increase above $102,500 No relief No relief No relief

Taxpayers must be up to date with their land tax payments to be eligible for relief.

Affordable housing - developers

The SA Government has a comprehensive program promoting the development of affordable housing, which is set out in notices in the Government Gazette under the South Australian Housing Trust Regulations 2010.  Relief will be provided such that the amount of land tax is payable by reference to each parcel of affordable housing land as if it was assessed separately.  Relief is limited to a 12 month period and is conditional upon the developer entering into a Land Management Agreement or similar.

Affordable housing – owners

The SA Government has a public and community housing program.  Ex gratia relief to reduce land tax to nil, which is limited to 100 SA properties as an initial pilot program for 5 years, will be available to landowners which meet the following conditions:

  • Agreement with a registered community housing provider for the purposes of affordable community housing.
  • Rent is less than 75% of current market rent
  • Tenant has low to moderate-income (currently approx. $51k for single or $67k couple, with increases for dependent children)
  • No rented to a related party
  • Is continuously rented as such, with no gap in rental period exceeding 3 months