2008 Land Tax Rates By Ratnadeep Hor | December 2007 Area of Expertise | Business & Property
Summary The NSW Government has released new land tax rates for 2008.
Who Does This Impact? All owners of land in New South Wales.
What Action Should be Taken? First time land tax payers should lodge their registration forms at the Office of State Revenue by 31 March 2008.
The NSW Government has announced new land tax rates for 2008. For the 2008 year, land tax is payable on the total value of all the land in NSW owned as at midnight on 31 December 2007. 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.
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Land leased from State or Local Governments.
Exemptions from land tax include land which is the taxpayer’s principal place of residence, land which is zoned rural or non urban and is primarily used for primary production, and land used primarily for boarding houses and low cost accommodation within a 5km radius from the Sydney GPO. The value of taxable land is determined by the Valuer General on 1 July of the preceding year and does not include any structures or improvements on the land such as a house.
2008 Land Values Prior to 2007, land tax was based only on the value of the land as determined by the Valuer General on 1 July of the preceding year. As of 1 January 2007, the value used to determine your land tax liability will generally be determined by the average of the land value for the current year and the land value for the 2 previous years.
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2008 Land Tax Rates by Ratnadeep Hor
For example you own a parcel of land liable for land tax for the 2008 land tax year. The value of the land for the purposes of calculating your land tax liability is determined as follows: 2008 Land Value
$560,000
2007 Land Value
$450,000
2006 Land Value
$400,000
Average Land Value
$470,000
Therefore, the value of the land for the purposes of calculating your tax liability for 2008, will be $470,000, not $560,000. Where the parcel of land in question was only recently created the average value will be based only on the land values for those existing taxing dates when the newly created land did exist.
2008 Land Tax Threshold As of 1 January 2007, the land tax threshold is calculated similar to the new valuing system. The land tax threshold will be 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. The threshold cannot fall below the threshold of the previous year. Where the average falls below the previous year, the previous year’s threshold will apply. For 2008 the ‘indexed amount’ calculated by the Valuer General is $369,000. Year
Indexed Amount
2006 Land Tax Year
$352,000
2007 Land Tax Year
$356,000
2008 Land Tax Year
$369,000
Average
$359,000
Therefore the land tax threshold for 2008 is $359,000.
2008 Rates The land tax rate for 2008 is $100 plus 1.6% of the land value in excess of the threshold. Therefore, where the land value for the purposes of calculating your tax liability for 2008 is $470,000, the land tax liability for 2008 would be: ($470,000 - $359,000) x 1.6% plus $100 = $1,876
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2008 Land Tax Rates by Ratnadeep Hor
Where the land value is below the threshold, no land tax is payable.
Companies and Trusts There is no threshold for non-concessional companies and special trusts. The land tax payable is still 1.6% of the land value. For example, if a non-concessional company or a special trust has a total land value of $250,000, the land tax payable will be $4,000.
Returns If you own property other than your principal place of residence, you are most likely liable to pay land tax for 2008. A registration form must be completed and lodged with the Office of State Revenue by 31 March 2008. If you have already registered in the previous year, you will automatically receive a notice of assessment for 2008. Registration can be done online at www.osr.nsw.gov.au. Alternatively, you can request a registration form from the Office of State Revenue or download it from their website.
Payment You may pay your land tax in one of two ways. You can either pay the full amount of land tax prior to the date of the first instalment and receive a 1.5% discount, or pay by 3 instalments without a discount.
For more information, please contact: Ratnadeep Hor Lawyer T: 02 8257 5706 ratnadeep.hor@turkslegal.com.au
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