2007 Land Tax Rates by David To | February 2007
The NSW Government has announced the new land tax rates for 2007. For the 2007 year, land tax is payable on the total land value of all land in NSW owned as at midnight on 31 December 2006. Land includes: •
Vacant land, including vacant rural land.
•
Holiday homes.
•
Company title units.
•
Residential, commercial or industrial units including car spaces.
•
Commercial properties, including factories, shops and warehouses.
•
Land leased from State or Local governments.
Exemptions from land tax are available for: •
Land which is used as your principal place of residence.
•
Land which is zoned rural or non urban and is used primarily for primary production (e.g. farming).
2007 Land Values – Different Valuing System In previous years, land tax was based only on the value of land as rated by the Valuer General on 1 July of the preceding year. For 2007 and subsequent land tax years, the value used to determine your land tax liability will generally be the average of the land value for the current year and the land values for the previous two years. For example, Ray owns a parcel of land liable for land tax for the 2007 land tax year. The value of the land for the purposes of calculating land tax is determined as follows:
2007 land value
$560,000
Land value as at 1 July 2006
2006 land value
$450,000
Land value as at 1 July 2005
2005 land value
$400,000
Land value as at 1 July 2004
Total
$1,410,000
Divided by 3
Average land value
$470,000
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Therefore, Ray’s 2007 land tax liability will be calculated based on the average land value of $470,000 not $560,000. If the parcel of land in question was only recently created (e.g. through subdivision or amalgamation), the averaging system only applies once the newly created land has been in existence for three years.
2007 Land Tax Threshold The land tax threshold for the previous year (2006) was $352,000. For the 2007 land tax and subsequent years, the land tax threshold will be calculated similar to the new valuing system i.e. the average of the ‘indexed amount’ for the new tax year and the previous two land tax years, as calculated annually by the Valuer General. However, the threshold cannot fall below that of the previous year and where the average threshold is less than the previous year’s threshold, the previous year’s threshold will continue to apply. The average threshold for the last three years is calculated as follows:
Year
Indexed Amount
For the 2005 land tax year
$342,000
For the 2006 land tax year
$352,000
For the 2007 land tax year
$356,000
Average
$350,000
As the average threshold ($350,000) is below the land tax threshold for 2006 ($352,000), the previous year’s threshold of $352,000 will continue to apply for the 2007 land tax year.
2007 Rates For land under the threshold of $352,000, no land tax is payable. Above the threshold, the rate is $100 plus 1.7% of the land value in excess of the threshold. Going back to the above example, Ray’s liability for 2007 would be: ($470,000 - $352,000) x 1.7% plus $100 = $2,106.00
Companies and Trusts There is no threshold for non-concessional companies and special trusts. The land tax payable is still 1.7% of the land value.
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Returns If you own property other than your principal place of residence, you are most likely liable to pay land tax for 2007. A registration form must be completed and lodged with the Office of State Revenue by 31 March 2007. If you have already registered in previous years, you will automatically receive a notice of assessment for 2007. Registration can be done online at www.osr.nsw.gov.au. Alternatively, you can request a registration form from the Office of State Revenue NSW or download it from their website.
Payment After you have received an assessment, you can either pay the full amount of land tax prior to the first instalment date and receive a 1.5% discount, or pay by three instalments (no discount).
For more information, please contact:
David To Lawyer T: 02 8257 5719 david.to@turkslegal.com.au
Sydney | Level 29, Angel Place, 123 Pitt Street, Sydney, NSW 2000 | T: 02 8257 5700 | F: 02 9239 0922 Melbourne | Level 10 (North Tower) 459 Collins Street , Melbourne, VIC 3000 | T: 03 8600 5000 | F: 03 8600 5099
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