Haven't paid Land Tax. Need some advice.

Discussion in 'Accounting & Tax' started by w124C, 5th Oct, 2018.

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  1. w124C

    w124C Member

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    Through a slightly complex purchasing procedure, it turns out that I haven't informed the state revenue office (SRO) about my IP for a number of years now. As a result, I haven't been paying land tax for a number of years. I am about to inform the SRO shortly.

    I'm wondering if I can get any advice from people whom have been in the same situation about how to approach SRO, what to expect etc?

    I'm happy to pay whats owing in a lump sum, and am even open to paying interest. But I'm resistant to the idea of paying a fine and am interested in what other peoples experiences have been in the same situation. Any advice from anyone else in the same boat?
     
  2. Harry30

    Harry30 Well-Known Member

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    Another issue you will need to seek advice on is whether paying previous years’ land tax is tax deductible.
     
  3. w124C

    w124C Member

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    From my understanding, it is. But only for the applicable year. Given I am also yet to do tax returns for those years, I should be able to claim this without problem.

    My main concern is having to pay a fine for a tax that I consider to be not well publicised at all.

    If you look at the SRO website, it doesn't even provide information as to what the land tax is or why it exists! I'll refrain from posting any further thoughts on this tax as I will probably go on a long rant!!! :mad:
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Have a read of the relevant taxation administration act in the state where the land is located and see what penalties and interest you could be up for and then Get some legal advice (from a lawyer!)
     
  5. w124C

    w124C Member

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    Thanks Terry. Appreciate the advice.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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  7. Jamesaurus

    Jamesaurus Well-Known Member

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    Why are you offering them information about past years again?
     
  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Voluntary admissions are well treated by OSRs. They encourage compliance. I havent seen any issue a penalty in such cases (you could ask them to favourable consider remission of any) BUT they will issue a notice for the relevant years. And may impose interest. If they do, ask for remission. They are generally happy to waive interest in such cases.

    The arrears for each year may NOT be deductible as you think ; Read this :
    ATO ID 2010/192 (Withdrawn) - Are arrears of land tax deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) in the year in which they are paid?

    This view is now contained in the ATO rental properties guide.For example if you incur a 31 December 2016 land tax assessment this is what they call 2017 land tax and it would be deductible in the 2017 tax return even if paid now. That may need to be amended and its not claimed in the 2019 year. The 31/12/15 year or earlier may be out of time to amend - Its often 2 years.

    A common question - Cant I just ignore registration ? Not really, they tend to catch up at some time and then if they catch you penalties are more likely to occur. And when you sell a land tax clearance certificate is required before you can transfer title. They will ping you then...Commonly only 4 years.
     
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Land Tax is well known. Its existed since the 1958 Act was enabled in Vic. It applies to all land other than some that is exempt. The most common being your own home sometimes. OSR Vic have a good website that is well maintained and has always been a good source of information : Land Tax | State Revenue Office

    Ignorance of a law isnt reason to oppose it. I dont think you will find any landowners who want to pay land tax. I would argue Tax Law in any form isnt easy to find or understand but it impacts us all. The OSR website clearly does contain information about present land tax thresholds and rates. And past information is easily accessed too.

    One of the responsibilities of buying property is understanding taxes. If you had read the ATO rental property guide it would have mentioned land tax. You should have asked - Whats that ?
    Registration for land tax is recommended for all property owners. Other than QLD its not automatic.
     
  10. Jamesaurus

    Jamesaurus Well-Known Member

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    So do the OSR get the address data from the ATO where it may have been declared as an IP?
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    One of many sources. State bond records. Land titles office data matched with other info is a good way, Real estate agents, councils rates, water rates, websites like Airbnb, properties being sold, tribunal hearing records, insurance companies, council building permits, maybe even lenders although now mortgages arent dutiable thats no longer a option.

    The ATO cant share personal tax details with the states but under the GST agreement the Commonwealth can assist the states and vice versa. So a list of IP addresses from the ATO doesnt breach taxpayer privacy and can be used by OSR to match its records and find the owner to issue a please explain letter. Kaching $$$$$$$$$$$

    Checkout this data matching project
    Real property transactions data matching program protocol The outcomes could be shared with the states in part. Note the bond data bit...They are getting better at it.

    and...

    In very limited and specific circumstances we may be permitted by law to disclose individual records to other government agencies. In some permitted circumstances this may include de-identified data.
     
    Last edited: 5th Oct, 2018
  12. w124C

    w124C Member

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    Thanks for the replies guys. I've called SRO and they'll be issuing me with the tax amount for the missed years without any penalties or interest.
     
    AlyshaH, wylie, Paul@PAS and 2 others like this.
  13. w124C

    w124C Member

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    Anyone know if I can claim past years land tax on that applicable years tax return if I am paying that past years tax return via a payment plan now? Or would I need to make the payment in full before I can claim?
     
  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    If its a incurred liability it is payable when incurred. NOT when its paid. This has been well explained above. But if you plan to enter into an agreement when the land tax wouldnt be paid ie waived or something then its not incurred.

    Any interest under a payment plan would be deductible when it is both paid and incurred (ie 2019 tax year)
     
  15. w124C

    w124C Member

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    Thanks Paul!