Since publication of this article, the Queensland Government has announced it is shelving plans to amend the rules around land tax liability. The effect of the proposed changes involved calculating the value of an owner's interstate property portfolio to determine what rates they should pay for any land they owned in Queensland.

Following announcement of the reforms, public statements were made by the Tasmanian, New South Wales and Northern Territory premiers confirming they would not provide landholding records to confirm interstate holdings of investors. In light of the pushback, the Queensland Government has determined it would have great difficulty enforcing the changes.

The shelving of the reforms is good news for landowners and occupants of investment properties in that it provides greater certainty around future estimates of land tax liability for proprietors, and amounts payable by tenants presuming they would bear the cost of the increased liability by way of higher rent or collection of outgoings.

While the reforms have been shelved, it should be noted there is a possibility they could be reinstated in the future (although this is unlikely). 

The way land tax is being calculated in Queensland is changing. Land tax is a state-based tax and is assessed on freehold land beyond a certain value currently owned in excess of a value of around $600,000 for individuals and $350,000 for companies and trusts. 

It is a value tax and the taxable rate is between 1% – 2.25% for individuals and 1.5% - 2.75% for companies and trusts.

The family home is usually exempt. 

Until recently the land assessed to calculate the tax was only on land owned in Queensland. No other land outside that state was taken into consideration when calculating that state’s land tax. [1] 

As of 1 July 2023, all relevant land owned in Australia will be used to ascertain:

• whether the Queensland land tax-free threshold has been exceeded; and
• the rate of Queensland land tax that will be applied to the Queensland proportion of the value of your landholdings.

So the interstate land is not technically taxed but ownership of interstate land will affect how much Queensland land tax you will pay. The rate of land tax effectively goes up in those circumstances. 

The example on the Queensland government website shows that a Queensland taxpayer that owns Queensland taxable land valued at $745,000 and Victorian land valued at $1,565,000 would have to pay an extra $6,472.37 every year in land tax. [2] A NSW landowner states that his Queensland land tax liability will increase by about $27,000 a year. [3]

There will also be increased reporting obligations. 

The Queensland government is defending the new law as a way to prevent interstate land investors from taking advantage of multiple tax-free and progressive rate thresholds. [4]  

Commentators are questioning the constitutionality and efficacy of the new law. [5]  It is reported that the NSW government is even seeking advice as to the constitutionality of the Queensland law. [6] 

The REIQ is critical of the proposed law and feels that the proposed increase in land tax will “hurt Queensland landholders, renters, companies, and small businesses in one fell swoop”[7]. Indeed the REIQ is calling for this land tax regime to be repealed. [8]

If you require any assistance regarding your land tax liability or you wish to discuss the issue further. Please do not hesitate to send us an email or call 07 3220 1144. We are here to help.

[1] https://www.reiq.com/articles/reiq-calls-for-repeal-of-illogical-land-tax-regime/ 

[2] https://www.qld.gov.au/environment/land/tax/interstate 

[3] https://www.afr.com/property/residential/new-queensland-land-tax-will-drive-away-investors-20220905-p5bfgi

[4] https://documents.parliament.qld.gov.au/tp/2022/5722T897-861E.pdf 

[5] https://www.afr.com/property/residential/new-queensland-land-tax-will-drive-away-investors-20220905-p5bfgi 

[6] https://au.sports.yahoo.com/qld-property-sector-seeks-land-021603456.html 

[7] https://www.reiq.com/articles/reiq-calls-for-repeal-of-illogical-land-tax-regime/ 

[8] https://www.youtube.com/watch?v=ZovtWKS4LvE