The rules and regulations around tax change regularly. An upcoming change we are keeping our clients informed about involves land tax in Queensland.
This will affect you if you own property in Queensland, even if you live outside the state. Have a look at our quick explainer.
Land tax in Queensland, what’s changing and when?
As of 30 June 2023, anyone who owns land in Queensland and another state in Australia could face a larger land tax bill.
This is because Queensland is set to change the way the land tax is calculated.
Previously, Queensland land tax was calculated based on Queensland taxable landholdings only. The tax-free threshold was $600,000 for individuals, and $350,000 for companies, trustees and absentees.
Existing exemptions will still apply, such as the home (principal place of residence) and primary production exemptions.
From 30 June 2023, if a Queensland landholder also owns non-excluded interstate land, Queensland land tax will be calculated at a higher rate.
As shared by Accountants Daily, this ‘aggregate’ method of calculating land tax means “an owner’s liability for land tax will be determined based on the total value of their Australia-wide landholdings that are not exempt, rather than solely on their non-exempt Queensland landholdings.”
What does it mean? Effectively, it’s a tax rate increase for landowners who own land in Queensland as well as another state. If you only own land in Queensland, you won’t be affected.
What you need to do about land tax changes in Queensland
If you or your business own land in Queensland and other parts of Australia, you will need to take action.
The Qld Government is requesting that you declare your interstate landholdings. If you don’t have one already, set up a QRO Online account then complete a declaration about your land, its value and the percentage you own.
If you own land in Queensland and interstate, land tax will be calculated on 30 June 2023 based on a new formula that includes the total of your taxable land located in Queensland and the statutory value of your interstate land.
New Queensland land tax example
The example shared by the Queensland Government demonstrates the difference the new land tax calculation formula will make.
Example of Queensland Land Tax at 30 June 2022
For an individual landowner who owned taxable land in Queensland valued at $745,000 and owned taxable land in Victoria valued at $1,565,000 on 30 June 2022, the land tax bill was $1,950, calculated as follows:
- The first $599,999 of Queensland taxable land value incurs no tax.
- The next $145,001 of Queensland taxable land value incurs $500 + 1 cent per dollar = $1,950 land tax.
- The interstate land is not included in the calculation.
Example of Queensland Land Tax at 30 June 2023
For an individual landowner who owns taxable land in Queensland valued at $745,000 and owns taxable land in Victoria valued at $1,565,000 on 30 June 2023, the land tax bill will be $8,422, calculated as follows:
- Taxable value of Australian land is $2,310,000
- The first $599,999 of Australian taxable land value incurs no tax.
- The next $400,000 incurs $4500
- The next $1,310,000 incurs 1.65 cents per dollar = $21,615
- Total $4500 + $21,615 = $26,115
The next step is calculating the Queensland percentage of taxable land and applying this percentage to the land tax total.
Taxable land located in Queensland $745,000 / Taxable Australian Land $2,310,000 = 32.25%
Land tax payable $26,115 * 32.25% = $8,422
As you can see, the difference is significant.
Are you prepared for land tax changes?
If you own land in more than one state in Australia, it’s important to have a conversation with your accountant. The additional land tax expense may necessitate future rent increases, or if that isn’t possible you may need to review your budget, so you are prepared to pay the increased tax bill.
Want more information about land tax in Queensland? Speak to Crest Accountants today.
Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice. Whilst the information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact upon the accuracy of the information.
