Anyone getting hard hit by absentee land taxes?

Rules change. Suck it up.

 

But "suck it up" do you mean that one should continue to hold and pay the additional taxes?

 

Redo the numbers. Hold if you think its a good investment, sell if you dont. If you hold, you pay the additional taxes, because thats the law.

 

Thanks. Well that's a very very obvious thing to be doing. I agree - It's what any rational investor should be doing when faced with a change like what has happened with the absentee. First though it's vital to understand he actual law, how it applies, how it can be avoided/minimised via legal means.

There is a further option though for investors which is to try to influence the law (ie to have it revoked in the future if it is deemed to be undesirable). Both these actions can be taken concurrently.

 

First thing to do would be to look at the definition of 'absentee'. The second thing to do would be to see what you could do to not be an 'absentee'.

 

Agree Terry. For Queensland it's clear citizens can be absentees if out of Oz for more than 180 days during a tax year. (Some exemptions apply, up to 6 years, if one can shown that one purchased while still as a resident and then went overseas for work purposes).

The reason so many Queenslanders feel betrayed is that they are working overesas to pay off their "dream home" only to have it stolen from them bit by bit by exorbitant punative land taxes (which come close to 3% per annum of the assessed land value). Heartbreaking for some people who already pay local income tax on rent, council rates, employ labourers for maintance work, and of course who pay off a mortgage. Of and the icing on the cake is no capital gains 50% discount for these types of Ozzies either.

 

Max, Whoa... Thats a simple view. The period is up to 5 years and its harder to get than you think unless you are a State or Comm employee ON LEAVE. For the average owner you are required to have an Australian employer pay you before you depart for at least 1 years AND then while overseas the same employer pays you. In reality many foreign companies will use the local arm to pay you while overseas to comply with that country law...eg Microsoft USA not Microsoft Australia. Then it fails. That "your employer" test is harder to get than most realise.

This concession is far easier for ADF members or consular / embassy staff and some other agencies who send staff offshore who work for non-descript companies. (eg Intelligence). I have also seen it used by persons on leave from ADF and contracted to the UN, and other international agencies. They get no time limit provided they dont resign.

Catch too is you must apply for the concession and it is granted and then return before the 5 years expires. Exceed it by even one day and you can be re-assessed on the 5 years of absentee rather than standard resident land tax.

QLD OSR Absentee concession :

In limited cases, the land tax rates for individuals will continue to apply to you if you work overseas. For this to apply, you must:

• be a public officer of the Commonwealth or of a state, who is absent in the performance of your duties or
• have been working for your employer in Australia for at least 1 continuous year before you go overseas, and are directed by that employer to continue working for them overseas for a period less than 5 years. If the period is longer, you will be reassessed as an absentee for the whole time you are overseas.

 

Seriously how do you survive everyday life? If i got this worked up about every rule change i would need medicationz

 

Well to be honest I'm guessing I "survive everyday life" better that you do.

As for the land tax changes the "rule change" imposes new costs on me annually of over 100k. To me that is not a trivial amount, though unlike you I cope with any business decision with rational thought rather than resorting to medication.

 

Yeah lots of rational thoughts in your posts about this topic.

 

Agree.

 

As for the land tax changes the "rule change" imposes new costs on me annually of over 100k.

If I had $6.6667 million of surchargeable land and am a non-resident absentee I would be thinking that the gravy train had been occurring too long or that the structure chosen for such significant investment was not carefully considered. What individual would hold so much QLD land in their own name anyway ? Land not held by an individual is unaffected.

 

Properties in a trust do not have to pay the absentee tax?

 

Same rates

 

Well allow me to reply. The assumption was, at the over the time that I accumulated property that Australian citizens would not be penalised for living and/or working overseas. It's not an unreasonable expectation that the "gravy train" as you call it, would apply to all Australian citizens. (Although I'm not sure what the gravy train actually is you are referring to - could you elaborate?)

As for structure chosen to hold the land, it makes no difference. A corporate structure or a trust structure is similarly affected. (For lower amounts of land one could spread holdings across numerous famiky members (taking advantage of a 350k min threshold), but hardly worth the hassle.

 

Why is it a reasonable expectation? 'Citizen' and 'tax resident' are completely different concepts, have been for decades. Tax nonresidents have also been taxed differently for decades. Citizen is not really applicable for tax law. Wealthy paying higher taxes isnt going to get much sympathy even here. At least here people will think positively of you for having 6m in LAND value. Out in the wider world, your more likely to get lynched?

 

It's a reasonable expectation because historically such distinctions were applied to income tax, but not to a tax on asset values located in Australia, including land. (This is why in make no difference whether an asset was held in a company name or individually). And indeed this is why so many were shocked at the recent changes in QLD. Make sense?

As for the moral rationale of stealing a citizens land cut but cut annually this could be debated. But basically my view is that citizens overseas pay the same income tax on income earned in oz, same mortgages, same council fees, and yet don't get any of the benefits such as free health care, schooling, social welfare. And yet are tax more on the assets they have in Oz. It's also counterproductive - money and wealth will simply be moved out of Australia and out of real estate and to more welcoming countries and investments.

 

As far back as I can remember there has been an absentee tax on land in QLD.

 

Thats why they tax land. How will you move it out of australia? You want to go somewhere more welcoming? Pay your cgt and go for it.

 

On the lynching thing I agree with you. It seems to me that property ownership is becoming increasingly politicised. Again good reasons to be cautious with this asset class going forwards.