As is known to all, in addition to paying stamp duty to the government, the annual payment of land tax to the state government is required to be paid for the purchase of property in Australia during the holding process.
Land tax expenditure sometimes bothers many Australian real estate investors, and in many cases it affects their investment returns. After the start of the new fiscal year in Australia, many Australian property owners have received the land tax assessment forms (as follows).
（Source from www. gov.com.au）
Among them, some owners have owned their properties for a long time, but suddenly received a land tax bill;
Some owners only heard about that Australia has stamp duty, and said that they never know how to calculate land tax;
Even some owners have defaulted on their land taxes without knowing why to pay for it or how to apply for exemption.
Today, I will take you to understand the land tax in Australia.
The following rates apply only to Queensland
What is the land tax?
Australian land tax is the annual tax paid by land owners and collected by state/regional governments. Currently, only the northern territory does not have such tax. The taxable amount shall be levied and paid once a year according to the total value of the land held by the owner or joint owners.
The State Revenue Office evaluates the land value every year, and calculates the land value under the name of all Australian house owners on June 30 (or December 31), the last day of the fiscal year of the previous year.
The State Revenue Office calculates the land tax on the basis of the "Site Value" provided by the Council, which is usually recorded on the Council Rate Notice of the property.
What kinds of lands need to be levied the land tax
If the land value of the property exceeds a certain value, a land tax may be required. The following types of land, whether owned by yourself or jointly owned with others, are subject to land tax as required:
Commercial or industrial properties, such as retail stores, commercial premises and factories
（2）Vacation properties
（3）Rental or investment properties
（4）Some primary production sites that are not exempted
（5）Vacant lands including rural lands
（6）Any other land that is not exempt
（7）Others
What kinds of lands can be exempted from the land tax
The lands that can be exempted from the land tax including:
（1）the main residence (home)
Generally speaking, property ownership is in the name of the owner, rather than a company or trust institutions
In some cases the exemption may be extended to a trustee of a trust. In these cases, one or more beneficiaries use the land as their principal place of residence.
（2）Land used for primary production. (farm)
（3）The total value is less than the land tax imposed by the state/region where the land is located
（4）Apartments and charity organization
（5）Others
In short, most investment properties need to pay land tax. Self-occupied properties or land used for primary production can usually be exempted from land tax.
Will housing construction affect land tax?
Land tax, is literally a tax levied on "land value", which does not include the value of buildings on the ground.
For example, if an investor has a seaside villa worth 1.2 million Australian dollars, the real "land value" may be 500,000 Australian dollars. The government will also adjust the land price according to the market conditions, and then notify the owners through the council rate and tax notice.
That is, there is no correlation between the land tax and the value of the housing construction.
How to collect the land tax
Apart from the Australia's northern territory without Land taxes, each state has different funds-collecting levels and tax rates to "Taxable Land Value". Moreover, the corresponding land tax levy is not the same amount. The following is Queensland's land tax policy (for land owned by individuals only):
（Source from www.gov.com.au）
As can be seen from the figure above, the land tax threshold of Queensland is $599,999 at present. That is to say, if the value of all land in your name other than the land exempted adds up to less than $599,999, you do not need to pay land tax in Queensland.
For example, if Mr. Li’s land is worth $680,000 in 2017, the land tax he needs to pay: $500+$0.01*$80,000=$500+$800=$1,300.
However, you may wonder whether all individuals who buy land in Queensland will pay land tax according to the above minimum tax point.
Well, that may be impossible! Some people not only have to pay the lowest tax threshold, but also to pay an additional 1.5% surcharge of the land.
Owners of land in Queensland who are "absentee" will pay an additional 1.5 % surcharge of the land from July 1, 2017.
How to determine absentee status
(Source from www.gov.com.au)
Individuals who meet the following criteria will be defined as "an absentee", if you:
1 Live outside of Australia, and were away from Australia at 30 June or
2 Have been away from Australia for more than six months in total during the financial year before 30 June.
Note: if you are an absentee, you cannot claim a home or primary production exemption, at the same time, there is no correlation between the absentee status and the citizenship of Australia.
You may be an absentee even if you are the Australian citizen or the permanent resident.
(Source from www.gov.com.au)
In limited cases, the land tax rates for individuals will continue to apply to you if you work overseas. For this to apply, you must:
1 Be a public officer of the Commonwealth or of a state, who is absent in the performance of your duties or
2 Have been working for your employer in Australia for at least 1 continuous year before you go overseas, and are directed by that employer to continue working for them overseas for a period less than 5 years.
Rate of tax for “absentee”
（Source from www.gov.com.au）
As can be seen from the above figure, for the "absentee", the minimum land tax levy point of Queensland is $349,999 at present. That is to say, if the value of all the land under your name, except the land exempted, adds up to less than $349,999, you do not need to pay land tax in Queensland, but you still need to pay 1.5% additional surcharge of the land.
How to pay the land tax for the land under the joint names?
The trend of joint investment and hoarding of large areas of land/fund raising/private equity has been gradually introduced from China to Australia, so in terms of land tax payment, the land tax is levied according to the household's land and the land tax assessment form sent by the State Revenue Office.
As for the apportionment of the tax, it can be argued by the land owners themselves. There is no stipulation that the tax should be paid according to the share, as long as the correct amount is paid on time.
Under what circumstances will the land tax assessment form be received?
1 Compared with the previous fiscal year, the land value of the property owned has exceeded the land tax threshold
2 You have purchased another property for the investment.
3 The land tax exemption of the previous property has been terminated
What should you do after receiving the land tax assessment form
1 Require review of the land tax summary in the assessment form
2 Contact the state revenue office to update the details of the owner and land information
3 You may apply for exemption if you meet the above conditions
4 Just pay the land tax as regulations.
Do I need to pay the land tax for the investment of the apartment?
Land tax's influence on investment apartment is very small, like a piece of land to build 50 apartments. There are sometimes hundreds of thousands of apartments in the city, and a piece of land value will be shared by all tenants, then the contribution to individual land value is generally lower than the AUD $599,999 (this does not include all apartments, but I have never seen the apartment that needs to pay the land tax in Queensland), so basically the land taxes of the apartment can be negligible. (Please refer to the transfer lawyer for the specific calculation)
Strategies for land tax exemption
（1）Diversification of investment areas of property
o 在不同州购买土地purchase lands in different states
o 瞄准北领地purchase in the northern territory
o 控制土地的购买价格control the purchase price of the land
（2）Use different individuals to buy investment properties
o 不同家庭成员different family members
o 家庭信托the family trust
Note: all Australian states have the corresponding legislative rights, so the laws vary from state to state. The above text can be used as the reference direction, but it is not the professional legal advice of individual cases.