2010 Land Tax Rates By Ratnadeep Hor | November 2009 Area of Expertise | Business & Property
Summary The NSW Government has released new land tax rates for 2010.
Who Does This Impact? All owners of land in New South Wales.
What Action Should Be Taken? First time land taxpayers should lodge their registration forms at the Office of State Revenue by 31 March 2010.
The NSW Government has announced new land tax rates for 2010. For the 2010 land tax year, land tax is payable on the total value of all the land in NSW owned as at midnight on 31 December 2009. 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; and
•
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.
2010 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. From the 2007 tax year onwards, the value used to determine your land tax liability is calculated by obtaining the average of the land
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2010 Land Tax Rates by Ratnadeep Hor
value for the current year and the land value for the two previous years. For example, you own a parcel of land liable for land tax for the 2010 land tax year. The value of the land for the purposes of calculating your land tax liability is determined as follows: 2010 Land Value
$560,000
2009 Land Value
$450,000
2008 Land Value
$400,000
Average Land Value
$470,000
Therefore, the value of the land for the purposes of calculating your tax liability for 2010 will be $470,000, not $560,000. If the land you own was part of a recent subdivision or amalgamation and did not exist for all three taxing dates, the average value will be calculated using the land values for the taxing dates when the property did exist. For example, the average of two taxing dates will be used, if the new property has only been in existence for two years.
2010 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 2010, the ‘indexed amount’ calculated by the Valuer General is $380,000. Year
Indexed Amount
2008 Land Tax Year
$369,000
2009 Land Tax Year
$380,000
2010 Land Tax Year
$380,000
Average
$376,000
Therefore, the land tax threshold for 2010 is $376,000.
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2010 Land Tax Rates by Ratnadeep Hor
2010 Rates The land tax rate for 2010 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 2010 is $470,000, the land tax liability for 2010 would be: ($470,000 - $376,000) x 1.6% plus $100 = $1,604 Where the land value is below the threshold, no land tax is payable.
2010 Premium Land Tax Threshold A premium threshold of $2.25 million was introduced for the 2009 land tax year, whereby landowners who have total land holdings valued above the premium threshold, will pay land tax at the new rate of 2%, for taxable land above the premium threshold. The premium threshold is $2,299,000 for the 2010 Land Tax Year. Therefore, where the land value for the purposes of calculating your tax liability for 2010 is $2,500,000 the land tax liability for 2010 would be: [($2,299,000 – $376,000) x 1.6% plus $100] + [($2,500,000 – $2,299,000) x 2%] = $34,888
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 2010. A registration form must be completed and lodged with the Office of State Revenue by 31 March 2010. If you have already registered in the previous year, you will automatically receive a notice of assessment for 2010. 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 web site.
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 three instalments without a discount.
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2010 Land Tax Rates by Ratnadeep Hor
For more information, please contact:
Ratnadeep Hor Lawyer T: 02 8257 5706 ratnadeep.hor@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 Insurance & Financial Services | Commercial Disputes | Workers Compensation | Business & Property
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