NSW Government Changes the Method of Calculating Land Tax by Michael Tzirtzilakis | July 2006
The State Revenue and Other Legislation Amendment (Budget Measures) Act 2006 amended the Land Tax Management Act 1956 by altering the formula for calculating land tax.
Averaging Land Values The taxable value of a parcel of land in the 2007 land tax year (1 January 2007 to midnight 31 December 2007), will be the average of the land value that applies for the current tax year and the two land values that applied for the preceding two land tax years. Where a parcel of land was recently created (by subdivision or amalgamation), the average value will be based only on the land values for those taxing dates when the land did exist.
Averaging the Land Tax Threshold For the 2007 and following land tax years, the land tax threshold will be averaged. The 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 land tax threshold was abolished for the 2005 land tax year. A “notional” threshold of $342,000 will be used for that year. The threshold cannot fall below that of the previous year and, where the average threshold is less than the previous year’s threshold, then the previous year’s threshold will apply.
Conclusion The amendments are said to be an endeavour to improve the “spikes” in land tax liability brought about by a combination of low thresholds and large increases in valuations. Although welcome, many will feel that these reforms do not go far enough, as many small-investors will continue to be caught by land tax.
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