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HG Alert: 2010 land valuation areas announced - 14 Oct 2009

The Department of Environment and Resource Management last week announced 23 local government areas to be valued in Queensland, with valuations taking effect on 30 June 2010.

The local government areas to be valued are Balonne, Banana, Brisbane, Bundaberg, Cassowary Coast, Charters Towers, Cook, Croydon, Etheridge, Fraser Coast, Gold Coast, Lockyer Valley, Moreton Bay, Redlands, Rockhampton, Somerset, South Burnett, Southern Downs, Torres, Townsville, Weipa, Western Dows and Whitsunday.

The valuations will be issued early next year, and will reflect unimproved land values as at 1 October 2009.

There are 35 local government areas which will not be valued in 2010. They are Barcaldine, Barcoo, Blackall-Tambo, Boulia, Bulloo, Burdekin, Burke, Cairns, Carpentaria, Central Highlands, Cloncurry, Diamantina, Flinders, Gladstone, Goondiwindi, Gympie, Hinchinbrook, Ipswich, Isaac, Logan, Longreach, Mackay, Maranoa, McKinlay, Mount Isa, Murweh, North Burnett, Paroo, Quilpie, Richmond, Scenic Rim, Sunshine Coast, Tablelands, Toowoomba and Winton.

Under the Valuation of Land Act 1944, the Department of Environment and Resource Management is required to undertake valuations at least once every five years. It is not obliged to issue a valuation every year. If a valuation is not undertaken in a particular year, the existing valuation will carry over.

In February this year, the Queensland Premier announced that over half of the areas to be valued in 2010 would have valuations frozen for 2009, as part of the Queensland Government’s plan to give businesses tax breaks and reduce administration costs in an effort to provide job security during the global economic downturn.

In its media releases, the Queensland Government seems to have focused on the impact that land valuations have on rates issued by the local governments, but have made little of arguably the biggest impact of land valuations - land tax.

It has been estimated that the Queensland Government would assess over $1 billion in land tax this financial year. Buoying this figure was the additional $93 million the Queensland Treasurer estimated would be raised by the 0.5 percent surcharge, announced by the Government in December last year, for those who hold more than $5 million of property.

The impact of the 2010 valuations on 2010/2011 land tax assessments will depend on when the last round of valuations for each local government area was undertaken, as land tax is assessed on a three year average of the unimproved values (the relevant unimproved value).

If properties were last valued at the peak of the market in 2007, it is possible that, given the blows that the property market has taken over the last few years, the current value will have decreased since that time. Dependent on the value of any valuations before 2007, this scenario may provide a lower relevant unimproved value for land tax purposes.

Conversely, ‘freezing’ valuations could lock in an unrealistic value, where a fresh valuation might have revealed a decrease in the unimproved value.

We note that there are strict timeframes for lodging an objection to land valuations and land tax assessments.

If you have any concerns about your current or future land valuations or land tax liability, or would like help with an objection, please contact HopgoodGanim’s Commercial Property team.