Land tax is a State tax imposed by the Queensland Government on owners of freehold land in Qld. Fortunately, the land tax year runs from July to June, so at least it is in line with the income tax year! You may be liable for the tax on land you own as at midnight on June 30. Exemptions do apply where the land is used as a person’s home, or if the land is used for a primary production business such as grazing, dairy or crops.
Land tax will become payable if the total taxable value of land you own which is not your home in Queensland exceeds the relevant threshold. The threshold amount and rate of tax depends on which category you belong to. For an individual resident of Australia, the threshold is $600,000. The tax rate is equal to $500 plus 1c for every dollar over $600,000, up to the value of $999,999. For example, let’s say you own 3 properties. One is your home and the other two are rental properties. The property which is your home is exempt, so can be disregarded when working this out. Say the remaining two rental properties have a total land value of $615,000. As the total value is greater than $600,000, you will be liable for land tax. The amount payable for these properties would be $650 ($500 + (15,000 x 0.01)).
For the majority of owners, the government will contact you to let you know of your obligations. An assessment notice will issue automatically based on the information held by the government as at midnight on 30 June each year.
One point to note – if you buy and sell land during the year, the tax is not apportioned between buyer and seller. Whomever, owns the land at 30 June will be liable. In the case of there being a contract for the sale of land in place at 30 June, the seller is deemed to be the owner for land tax purposes until the buyer takes possession, which usually occurs at settlement.
Some other points to keep in mind:
- Land owned by a company is not eligible for the home exemption
- When purchasing a property, make sure you obtain a land tax clearance certificate as if there is land tax owing incurred by the seller, you may be liable to pay this!
- If you own land jointly with others, the taxable value of the land will be apportioned according to everyone’s share.
- There are four categories for land owners – go to www.osr.qld.gov.au to check which one you fall under. This category will determine your threshold and your rate of tax.
- Two payment options are available – one single payment or the extended payment option, which allows you to pay 3 equal instalments on specific dates.