Paul Anderson & William Marsh | January 2013 | Corporate & Commercial
The NSW Government has released new land tax rates for 2013.
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 2013. The NSW Government has announced new land tax rates for 2013. For the 2013 year, land tax is payable on the total value of all land in New South Wales owned as at midnight on 31 December 2012.
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2013 Land Tax Rates
Facts Land includes: • • • • • • • •
Vacant land including vacant rural land; Land where a house, residential unit or flat has been built; Investment properties; 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.
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2013 Land Tax Rates
2013 Land Values
Year
Indexed Amount
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.
2011 Land Tax Year
$401,000
2012 Land Tax Year
$408,000
2013 Land Tax Year
$409,000
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 2013 land tax year. The value of the land for the purposes of calculating your land tax liability is determined as follows:
Average:
$406,000
Land Value
Value
2013 Assumed Land Value
$630,000
2012 Assumed Land Value
$560,000
2011 Assumed Land value
$450,000
Average Land Value
$546,667
Therefore, the value of the land for the purposes of calculating the tax liability for 2013 will be $546,667 and not $630,000. 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.
2013 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 years’ threshold will apply. For 2013, the ‘indexed amount’ calculated by the Valuer General is $409,000.
Therefore, the Land Tax Threshold for 2013 is $406,000.
2013 Rates The land tax rate for 2013 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 2013 is $470,000, the land tax liability for 2013 would be:
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Paul Anderson & William Marsh | January 2013
($470,000 - $406,000) x 1.6% + $100 = $1,124. Where the land value is below the threshold, no land tax is payable.
2013 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 $2,482,000 for the 2013 land tax year. Therefore, by way of example, where the land value for the purposes of calculating your tax liability for 2013 is $2,759,000 the land tax liability for 2013 would be: [($2,482,000 - $406,000) x 1.6% + $100] + [($2,759,000 - $2,482,000) x 2%] = $38,856.
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
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2013 Land Tax Rates
Paul Anderson & William Marsh | January 2013
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example, if a non-concessional company or special trust has a total land value of $470,000, the rate of land tax payable is 1.6 cents for each $1.00, the threshold will not apply and the total land tax payable is $7,520. If the land value exceeds the premium rate threshold of $2,482,000, 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 2013. A registration form must be completed and lodged with the Office of State Revenue by 31 March 2013. If you have already registered in the previous year, you will automatically receive a Notice of Assessment for 2013. 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.
For more information, please contact: Paul Anderson Special Counsel T: 02 8257 5742 M: 0418 491 395 paul.anderson@turkslegal.com.au
William Marsh Lawyer T: 02 8257 5745 M: 0415 504 486 william.marsh@turkslegal.com.au
www.turkslegal.com.au Syd | Lvl 44, 2 Park St, NSW 2000 T: 02 8257 5700 | F: 02 9264 5600 Melb | Lvl 10 North Tower, 459 Collins St, VIC 3000 T: 03 8600 5000 | F: 03 8600 5099