The Queensland government has become the first state or territory to include interstate landholdings in the calculation of land tax. The change means that land tax in Queensland will be calculated on the total landholdings in Australia. The new land tax calculations will apply from 30 June 2023.
Currently, each state and territory governs land tax independently from each other. Generally, if a taxpayer's landholdings in a certain jurisdiction is above the tax-free threshold, land tax will be applied at various rates.
Therefore, an individual may be able to take advantage of this by purchasing taxable land in multiple jurisdictions and essentially claiming multiple tax-free thresholds.
Additionally, Queensland levies land tax on a marginal tax rate, where taxpayers with higher landholdings pay a higher rate of tax per dollar of rateable land.
After Queensland Revenue Office calculates the gross land tax on your Australian landholdings, that amount is reduced so that your land tax liability relates only to your Queensland landholdings.
Jordi owns multiple properties across Australia, with the following land tax statuses and values:
- main residence in Queensland - exempt
- 2 investment properties in Queensland valued at $700,000
- 2 investment properties in Tasmania valued at $500,000.
Under the current rules, Jordi is liable in Queensland for the 2 investment properties as it is above the $600,000 tax-free threshold:
($700,000 - $600,000) × 1.0% + $500 = $1,500
However, under the new land tax rules, Jordi's total Australian landholdings are taken into account, which pushes him into the new tax threshold:
($1,200,000 - $1,000,000) × 1.65% + $4,500 = $7,800
The gross land tax on the entire Australian landholdings is pro-rated for Jordi's taxable properties in Queensland:
Queensland land tax = Gross land tax × Queensland landholdings ÷ Australian landholdings
$7,800 × $700,000 ÷ $1,200,000 = $4,550
What if I only have land in Queensland?
If you only have land in Queensland, there is no change at all.
If you would like a complete a draft calculation so that you are aware of the new liability, please contact Signum Business Advisers.