Interstate properties and QLD land tax

Included in recent legislation updates on the 30th June 2022 are changes to the Land Tax Act 2010 (Qld) which will, on and from the land tax year ending 30 June 2023, require that the value of a taxpayer’s total landholding in Australia (not just in Queensland) be considered in determining the taxpayer’s land tax liability in Queensland. This change could lead to a significant increase in Queensland land tax for taxpayers who own land in both Queensland and other states and territories. Whilst this is some time away, it is always good to prepare and get an understanding of how this may impact either personally or maybe your Self-Managed Super Fund. If you currently own property in both NSW and QLD, these changes may put you over the threshold and cost you thousands in Land Tax.

Position until 30th June 2022

The current position is that land tax is assessed on the value of all non-exempt landholding in Queensland only as at 30 June each year. Differing thresholds and rates apply depending on whether a taxpayer is an individual, corporation, trustee, or absentee. Types of land that are exempt from the calculation include land used for farming and an individual’s principal place of residence. The Revenue Amendment Act does not change these thresholds or exemptions.

Changes from 1st July 2023

The changes will apply for the land tax year commencing 1 July 2023 (i.e., for land tax assessed on land values as at midnight on 30 June 2023).

For the land tax year commencing 1 July 2023 and subsequent land tax years:

the Queensland Revenue Office will use the total value of a taxpayer’s ‘Australian Land’ in calculating land tax. This will include the value of both ‘Taxable Land’ and ‘Relevant Interstate Land’
the total value of ‘Australian Land’ calculated will then be used to determine the rate of land tax that will be applied to the ‘Queensland Proportion’ of landholdings.

The total value of your Australian land will be used to determine:

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

The current tax-free thresholds are $600,000 for individuals (other than absentees) and $350,000 for companies, trustees, and absentees.

Taxpayers will still be taxed only on the value of their Queensland landholdings, but in determining the rate of land tax that they pay, the total value of their ‘Australian Land’ will be used. This may push Queensland landowners into a higher land tax bracket.

The new rule works like this: