The Queensland state government has recently introduced a number of changes to the manner in which state taxes are administered and collected in Queensland.

Of these changes, the Queensland government has introduced a significant change to the manner in which land tax for Queensland is to be calculated.

This article sets out both the current and the new land tax regime in Queensland, with the implications of such change.  

Current land tax regime – Liability solely based on Queensland landholdings

Prior to the recent changes brought about by the Revenue Legislation Amendment Act 2022 (Qld) (Act), land tax in Queensland, like every other State and Territory in Australia, was calculated on the value of landholdings located solely within Queensland.

This included that no land tax was payable if the total value of land in Queensland was less than the tax-free threshold of $600,000 for individuals other than absentees and $350,000 for companies, trustees and absentees. In addition, given that land tax is calculated on a progressive scale, and that land holdings in different States or Territories are eligible for a progressive scale in each State/Territory, significant land tax savings could be achieved through holding land in different States/Territories (as compared to holding land only in one State/Territory).

New land tax regime – Liability based on Australian landholdings

As a result of the recent reforms to land tax introduced by the Act, land tax in Queensland will now be calculated based on the total value of Australian land owned by a taxpayer.

That is, from 30 June 2023, total interstate landholdings of a taxpayer that owns landholding(s) in Queensland will be used to determine if the tax-free threshold for land tax in Queensland is reached and how land tax is charged under Queensland’s progressive land tax scale.

In the event that total interstate and Queensland landholdings of a taxpayer are over the tax-free threshold in Queensland, then land tax for Queensland landholdings will be apportioned in relation to overall landholdings based on the rate of land tax in Queensland.

It is worth noting that while interstate landholdings will be used to determine if a taxpayer that owns Queensland landholdings is liable to pay land tax in Queensland, landholdings outside of Queensland will not be taxed by the Queensland revenue authority.

As provided on the Queensland Government website, for an individual who owns land in Queensland with a taxable value of $745,000 and land in Victoria valued at $1,565,000 the land tax payable before and after the changes are shown below:

For example:

Before changes

Taxable value of Queensland land: $745,000

Calculation
= $500 + (1 cent × $145,000)
= $500 + $1,450
= $1,950

After changes (As of 30 June 2023)

Taxable value of Australian land: $2,310,000

Calculation
= $4,500 + (1.65 cents × $1,310,000)
= $4,500 + $21,615
= $26,115

Apportionment of Queensland land

($745,000 ÷ $2,310,000) × $26,115 = $8,422.37

As will be noted from the example above, the changes will result in a significant increase in the amount of land tax payable in Queensland based on calculations involving total Australian land rather than calculations solely based on Queensland land.

Land excluded from new land tax regime

The extraterritorial effect of this new land tax regime is particularly draconian given the separation until now of the various land tax regimes within the confines of each state and territory.

Notwithstanding, there are some exclusions to the application of this new extraterritorial calculation of interstate Australian landholdings as summarised on the Queensland Government website:

Notification to Queensland Revenue Office

The Queensland Revenue Office will issue pre-assessment notices to owners who they identify as owning land in Queensland and interstate and owners with interstate land holdings will be required to notify the Commissioner as follows:

• If the assessment notice date is issued before 30 September 2023, within 30 days; or

• On or before 31 October 2023 where the assessment notice is issued after 30 September 2023.

Failure to notify the Commissioner of these interstate landholdings may result in interest and penalty tax being imposed under the Taxation Administration Act 2001 (Qld).

Implications

If you hold both Queensland and interstate properties in Australia, you should ensure that you are aware of these changes and consider whether any of the exclusions apply.

If the properties you own fall under the ambit of these new changes, you will need to notify the Queensland Revenue Office of your interstate holdings and ensure that the land tax payable in Queensland has been correctly apportioned and calculated.

More broadly, while these changes to the Queensland land tax regime are novel, it is likely that the various state revenue offices across the country may follow suit and enact similar amendments to their respective land tax provisions.

If you have any queries or require assistance with your land tax matters, please contact our specialist state taxes team at:

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au

Jan Oh
Graduate Lawyer
T +61 3 9611 0158
E joh@sladen.com.au