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Recent changes to Queensland Land Tax might affect you

Anyone who owns or leases land in Queensland may from time to time be required to pay land tax depending on how the property is owned and the unimproved values of that property, and in the case of tenants, the type of tenancy.

In the recent 2019 state budget, the Queensland Government announced a number of tax measures and these were quickly introduced when legislation was passed on 17 June 2019.

One of these measures was a change to the land tax rules which came into effect on midnight 30 June 2019.

A summary of the changes are: –

  • An increase in the rate for companies and trusts from 0.25 cents to 2.25 cents per dollar above $5 million aggregate landholdings;
  • An increase in the rate for companies and trusts from 0.25 cents to 2.75 cents per dollar above $10 million aggregate landholdings;
  • A company or trust that is foreign (where foreign persons hold or are entitled to more than 50% interest or distribution) will now be charged a 2% land tax surcharge; and
  • The surcharge for an absentee individual has increased from 1.5% to 2%.

These increases when applied to large landholdings could see a significant increase in the amount of land tax being paid. It is therefore important that the ownership structure is considered at the appropriate time so that the land tax liability is fully understood.

Buyer and Tenants need to ensure that Contracts and Leases for properties in Queensland address this liability for land tax. This has now become more important where the Landlord or Seller is foreign. Whilst Contracts and Leases typically apportion the land tax liability, it is open for the parties to negotiate the mechanics of the apportionment.

The Office of State Revenue is in the process of confirming the status of all landholders and will shortly issue assessments to foreign companies and trusts, however it is understood that this, along with its guidelines for relief will take some time.

One of the immediate concerns is that if a contract is settling shortly and the Office of State Revenue has not issued an amended assessment, arrangements may need to be made at settlement to deal with the potential future liability. Equally parties presently negotiating contracts will need to carefully consider how land tax is to be adjusted or allocated and any future reassessments should be dealt with in the Contract.