UPDATED September 30, 2022: The Queensland government has subsequently abolished the below proposal after pressure from other states and negative publicity around the measure.

Queensland landowners will face increased tax under a new law that changes how land tax is calculated.

From June 30, 2023, land tax will be calculated using the total value of an owner’s land across Australia, which includes taxable land within Queensland and relevant interstate land.

The total value of an owner’s Australian land will be used to determine whether the tax-free threshold has been exceeded, and the rate of land tax that will be applied to the Queensland proportion of the value of landholdings.

Currently, the tax-free thresholds are $600,000 for individuals (other than absentees) and $350,000 for companies, trustees and absentees.

Those who own land in Queensland only will not be impacted by the change and will be able to continue accessing all available exemptions, such as the home (principal place of residence) and primary production exemptions.

However, those who own land in Queensland and in another state or territory will need to declare their interstate landholdings via a QRO Online account.

While the Queensland government has described the change as “closing a loophole”, property experts have criticised the move and said property owners with holdings in other Australian states will essentially be taxed twice.

There are also concerns that the move will exacerbate the housing shortage in the state and drive up already increasing rents for tenants.

Calculating the new land tax: an example

For those who own land in Queensland and interstate, land tax will be calculated based on:

• the total of taxable land located in Queensland; and
• the statutory value of interstate land.

The ‘statutory value’ of interstate land is determined by valuation legislation in that state or territory. It does not include excluded land.

To illustrate the increase, take the example of an individual, John, who currently owns one property in Queensland with a taxable value of $745,000. John’s land tax would be calculated using the rates for individuals, and he would be issued an assessment notice for $1,950 for the 2022–23 financial year.

Calculation

Taxable value of land: $745,000

= $500 + (1% × $145,000)
= $500 + $1,450
= $1,950

On June 30, 2023, the value of John’s land in Queensland hasn’t changed, but he also owns land in Victoria valued at $1,565,000.

This brings the total value of Australian land owned by John to $2,310,000. This means the land tax is calculated using a higher rate for individuals.

John’s tax will now be calculated as such:

Calculation

Total taxable value of Australian land: $2,310,000

= $4,500 + (1.65% × $1,310,000)
= $4,500 + $21,615
= $26,115

This amount is applied to the Queensland portion of John’s land. For example: $745,000 ÷ $2,310,000 × $26,115.

Therefore, John will have to pay a tax of $8,422.37.

Excluded land

For land in Queensland, some landowners may be eligible for a land tax exemption. This will depend on the ownership and use of the land.

If a landowner’s land meets the eligibility requirements, they can apply to have its value excluded from the land tax calculation.

Typically, the eligibility requirements for exemptions that are available in relation to land in Queensland will apply for the exclusions available in relation to interstate land with generally equivalent requirements applying in some circumstances. Some exemptions will remain limited to land in Queensland only.

Some examples of exclusions available for interstate land include a principal place of residence, primary production, supported accommodation, and a moveable dwelling (caravan) park. Exemptions available for Queensland land only includes government land, port authority land, societies, clubs and associations.

More information about exclusions will become available after June 30, 2023, so check the Queensland Government website for updates.

Need advice on how the land tax change will impact you?

Navigating land tax can be a complex and intricate matter. At LDB Group, we have a team of specialists across tax and property that can advise you and ensure you are fully informed.

Call us on (03) 9875 2900 or fill in the contact form below to speak with one of our experts.