Introduction To Land Tax

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Introduction To Land Tax

May 25th 2006 02:06

Once you have purchased property in Australia, you will probably be required to pay an annual tax on this property. Only the Northern Territory does not have an annual tax tagged onto an investment in property. Land taxes vary widely within Australia, Usually a threshold is defined. Land which has a value below this given threshold is exempt from land tax. So one way of avoiding land tax is to purchase land with a value below the taxable threshold. This would seem like a nifty way of getting around land tax, however, the thresholds are revised annually, this means that your land tax liability could change annually. The other apparent way around land tax is to own land in multiple States, unfortunately, the government has cottoned on and a property owner’s payable land tax is calculated on all their owned land value, irrespective of State. When it comes to taxes, the government is remarkably efficient at closing loop holes.

For this financial year the land tax thresholds (ie the value of land up to which is not taxable) in Australia’s various states are;

Queensland - $450,000
New South Wales - $352,000
Victoria - $200,000
Western Australia - $130,000

South Australia - $110,000
Tasmania - $25,000
Australian Capital Territory – No threshold, all land is taxable
Northern Territory – No land tax

Also remember that land tax is applied to the value of the land, not the property. For investment purposes, the more generous threshold States may seem like an attractive offer, but this is not necessarily the case. Land tax rates in Queensland and New South Wales are much higher than in the ACT. So even though any land purchased in the ACT will be subject to land tax, the rate owed is far more favourable than a property in Queensland which is valued above the State land tax threshold.

An important consideration for any property buyer is the when a property is sold, the value of the land is adjusted and a pro rata tax can be passed onto the buyer. This is especially true in the case of purchasing a recently developed home or property and is something to be weary of. In some circumstances, the buyer may be paying the land tax liability of the property developer.

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