HG Alert: More Land Tax changes - this time, it’s not all bad news - 1 Apr 2010

The Land Tax Bill 2010 (Qld) was introduced into parliament last week as part of the Office of State Revenue’s three-phase taxation modernisation program. The first stage of the program was implemented last year. This next phase repeals the outdated Land Tax Act 1915 (Qld), and introduces the “plain English” drafted Bill. The Bill mostly keeps existing land tax concepts and policy, but does introduce some new concepts and clarifies some existing land tax policy applications. The Bill is proposed to take effect from 30 June 2010.

New concepts in the Land Tax Bill

The new concepts are:

  • introducing an extended payment option for land tax assessments; and
  • extending the 150 percent capping arrangements to 2010/2011 assessments.

Extended payment option

The extended payment option allows taxpayers to choose to pay their land tax assessment in three equal instalments, due at 45, 90 and 150 days. The extended payment option will only apply to payments made by direct debit. Payments must be received on or before the instalment dates or else the balance will become payable once again as a lump sum. If the extended payment option is not chosen, assessments will be payable within 90 days of the assessment.

Capping arrangements for 2010/2011

The 150 percent capping arrangement has been extended to 2010/2011 assessments in an attempt to minimise the effect of any increased 2010 land valuations. Where 2010 land valuations have significantly increased, the taxable value of the land for the 2010/2011 financial year will be capped at 150 percent of the relevant unimproved value for the previous financial year (some exceptions apply).

Other amendments

The Bill intends to keep the existing land tax policy and application. However, there are some changes which will affect co-owners of land.

Co-ownership of land

Previously, the Act provided that the Commissioner had discretion to jointly assess (as one owner) land which either:

  • had a relevant unimproved value of more than $50,000; or
  • was owned by five or more owners.

The Bill provides that the Commissioner now only has discretion to jointly assess (as one owner) land which is:

  • owned by five or more owners; and
  • the Commissioner considers the land is used for investment or commercial purposes.

Importantly, the Bill provides that only land owned by five or more owners is able to be jointly assessed, meaning that those who were previously caught by this provision of the Act (where there are less than five owners) can no longer be jointly assessed. The positive or negative financial effect of this will largely depend on what other land is owned by the landowner.

Change of language

The Act was originally drafted in 1915, and has been redrafted and amended a number of times since its introduction. As a result, the language used is quite outdated and difficult to understand. The plain English drafting of the Bill is intended to be easy to understand, and use language and terms consistent with other taxing statutes.

Changes made to concepts include the following:

  • “Relevant unimproved value” and “unimproved value” have been replaced with the new concept of “taxable value”, which relates to valuations issued under the Valuation of Land Act.
  • “Exemptions” and “deductions” are now referred to as “exempt land”.

Incorporation of public rulings into the Bill

The Office of State Revenue has, for some time now, issued public rulings on various aspects of the statutes it administers. These public rulings detail information and circumstances which the Commissioner considers relevant and important in applying specific provisions of the statute. To help taxpayers to better understand these considerations (and to make the Commissioner’s decisions transparent), the information in the land tax public rulings has been incorporated into the text of the Bill. Specifically, the rulings around principal place of residence and joint ownership have been included.

As the Bill was released late last year for public consultation, it is unlikely that any significant changes will be made before it is passed and becomes law.

For more information on the Land Tax Bill 2010 (Qld), please contact HopgoodGanim’s Commercial Property practice.