2011 Land Tax Rates by TurksLegal

2011 Land Tax Rates A PAPER BY PAUL ANDERSON JANUARY 2011

2011 Land Tax Rates

Summary The NSW Government has released new land tax rates for 2011.

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 OfďŹ ce of State Revenue by 31 March 2011.

Contents:

TURKSLEGAL

2011 Land Values

2011 Land Tax Threshold

2011 Rates

2011 Premium Land Tax Threshold

Companies and Trusts

Returns

Payment

PAPER

2011 Land Tax Rates by Paul Anderson

The NSW Government has announced new land tax rates for 2011. For the 2011 year, land tax is payable on the total value of all land in New South Wales owned as at midnight on 31 December 2010. 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 5 kilometre 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.

2011 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 from 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 two previous years. For example, you own a parcel of land liable for land tax for the 2011 land tax year. The value of the land for the purposes of calculating your land tax liability is determined as follows: Land Value

Value

2011 Assumed Land Value

$560,000

2010 Assumed Land value

$450,000

2009 Assumed Land Value

$400,000

Average Land Value

$470,000

Therefore, the value of the land for the purposes of calculating the tax liability for 2011 will be $470,000 and 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 taxing dates when the newly created land did exist. For example, if a new lot was created on 1 March 2007, its land value for 2009 is going to be the average of the land values for 1 July 2007 and 1 July 2008, i.e. an average of two years rather than three.

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2011 Land Tax Rates by Paul Anderson

2011 Land Tax Threshold As from 1 January 2007, the Land Tax Threshold is calculated similarly 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 2011, the ‘indexed amount’ calculated by the Valuer General is $401,000. Year

Indexed Amount

2009 Land Tax Year

$380,000

2010 Land Tax Year

$380,000

2011 Land Tax Year

$401,000

Average:

$387,000

Therefore, the Land Tax Threshold for 2011 is $387,000.

2011 Rates The land tax rate for 2011 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 2011 is $470,000, the land tax liability for 2011 would be: ($470,000 - $387,000) x 1.6% + $100 = $1,428. Where the land value is below the threshold, no land tax is payable.

2011 Premium Land Tax Threshold A premium threshold of $2.25 million was introduced for the 2009 land tax year. Land owners who have total land holdings valued above the premium threshold will pay land tax at the rate of 2% for that part of the taxable land above the premium threshold. The premium threshold is $2,366,000 for the 2011 land tax year. Therefore, by way of example, where the land value for the purposes of calculating your tax liability for 2011 is $2,500,000 the land tax liability for 2011 would be: [($2,366,000 - $387,000) x 1.6% + $100] + [($2,500,000 - $2,366,000) x 2%] = $34,444

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2011 Land Tax Rates by Paul Anderson

Companies and Trusts There is no threshold for non-concessional companies and special trusts. The land tax payable is still 1% 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. If the land value exceeds the premium rate threshold of $2,366,000, then the premium rate of 2% will apply above the premium rate threshold.

Returns If you own property other than your principal place of residence, you are most likely liable to pay land tax for 2011. A registration form must be completed and lodged with the Ofﬁce of State Revenue by 31 March 2011. If you have already registered in the previous year, you will automatically receive a Notice of Assessment for 2011. 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 three instalments without a discount.

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2011 Land Tax Rates by Paul Anderson

For more information, please contact: Paul Anderson Partner T: 02 8257 5742 paul.anderson@turkslegal.com.au

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