3 August 2022

Recently legislated changes to how land tax will be calculated in Queensland from 30 June 2023 in the Revenue Legislation Amendment Act 2022 could lead to additional land tax being payable going forward where owners also hold interstate land.

Queensland is the first Australian state or territory to aggregate interstate land for the purposes of determining the rate and quantum of land tax payable.

Although the Queensland Government has been quick to highlight they will continue to only tax the land owned in Queensland, the aggregation mechanism will, in many instances, lead to increased levels of Queensland land tax payable for landowners with interstate land.

Currently, land tax is calculated based on the value of taxable land in Queensland. However, from 30 June 2023, the Queensland Government will use the total value of Australian land owned by an owner to determine whether the land tax threshold has been exceeded and, if so, the applicable rate of land tax that will be applied to a land owner’s Queensland proportion of the value of their land holdings.

Importantly, land owners with both Queensland and interstate land holdings will be required to declare their interstate land holdings including land description, value and percentage of ownership through a QRO Online account by the earlier of within 30 days of receiving a land tax assessment notice or 31 October 2023.

The total value of Australian land will include a land owner’s taxable land in Queensland along with ‘relevant interstate land’, which will include land located in another state or territory that is valued under interstate valuation legislation and is not excluded interstate land. Additionally, the 2% surcharge applicable to absentee owners, foreign companies and trusts will be applied to the total value of Australian land.

Different land tax rates apply in Queensland depending on whether the landowner is an individual, company, trustee or absentee owner. The applicable rate of land tax based on the type of owner, and surcharge (if applicable), will be used from 30 June 2023 to determine the land tax payable on a landowner’s total Australian land. This total land tax amount will then be apportioned between Queensland and interstate land to determine the annual land tax liability for Queensland.

For example, take an individual landowner that has Queensland land with a taxable value of $1,000,000 and NSW land valued at $2,000,000. In the 2022/23 land tax year, their tax is calculated based on the QLD land only, resulting in an assessment notice for $4,500. However, in the 2023/24 land tax year, their land tax will be calculated on the QLD proportion of the total Australian land owned, resulting in an assessment notice for $12,500. This is calculated as ($1,000,000 / $3,000,000) x $37,500.

This example shows how a landowner with interstate land holdings could end up paying significantly more land tax in Queensland even where there has been no change to the value of Queensland land. There will also be instances where a landowner with both Queensland and interstate land valued below the relevant land tax thresholds will become liable for Queensland land tax from 30 June 2023, based on how the aggregation rules work.

As a landowner, the QLD Government has identified that landowners can have the value of the interstate land excluded from the land tax calculations if the interstate land meets certain eligibility such as being the principal place of residency or used for primary production.

However, the responsibility of identifying any applicable exclusions from the land tax calculations falls onto you as the landowner. The Queensland Government has confirmed that more information on exclusions and how to apply for them will be available to landowners after 30 June 2023.

If you are a landowner in Queensland, you need to carefully consider your land tax obligations and confirm that your land tax assessments for the 2023-24 land tax year and onwards are based on taxable land in QLD and all non-excluded interstate land only to help ensure these new rules do not result in greater land tax liabilities than necessary.

With help on land tax calculations and the new Queensland aggregation rules contact one of our Tax Consulting experts today.