Land Tax in Victoria and grouping provisions

Discussion in 'Accounting & Tax' started by Whiteman, 10th Jun, 2020.

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  1. Whiteman

    Whiteman Well-Known Member

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    Hi

    Im hoping some one on here has experience with this and can advise.

    I currently have two seperate family trust entities, that own seperate commercial properties in Victoria. Each one has a land value of approx $1.5M. The State Revenue Office groups the land value together and charges land tax on the total value of $3M.

    If I were to buy a residential investment with a land value of $1M in my personal name, does anyone know if this new investment is then grouped to give me a total taxable land value of $4M? Does grouping apply between investments in a corporate trust structure and personal name?

    The reason for the query is that the land tax for the most recent property purchase, if grouped is charged at the top rate with no threshold @ 2.25%, so land tax on the most recent purchase is then $22,500 per annum.

    I have looked online at the SRO website but can't find anything definitive there. I have rung the SRO and told I had over an hours wait and gave up.

    I already have an existing PPOR that is exempt from land tax.

    Thanks for your help
     
    Last edited: 10th Jun, 2020
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    You've indicated that each commercial property has its own trust entity, but do those trusts use the same trustee?
     
  3. Paul@PAS

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

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    Personal ownership is not grouped with a DISCRETIONARY trust or company as they are different legal owners. A unit holding interest may be aggregated withn personal ownership. Grouping rules dont apply otherwise. The comment : does anyone know if this new investment is then grouped to give me a total taxable land value of $4M is incorrect as you confuse trust and personal ownership.

    Grouping and land tax | State Revenue Office

    The trusts may be ungrouped if you seek legal advice : Land tax trusts - frequently asked questions | State Revenue Office
    The test for this typically looks at the beneficiaries.
     
  4. Terry_w

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

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  5. Terry_w

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

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    This doesn't sound right for a number of reasons.
     
  6. Paul@PAS

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

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    I have seen related trusts share a common trustee and this is incorrectly registered as a single land owner too.;)
     
  7. Whiteman

    Whiteman Well-Known Member

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    Hi Peter

    Its a seperate corporate trustee for each family trust, with the same single person beneficial owner with the standard inclusions for any children (I have one).

    So its
    Brexxxx P/L as trustee for the Mxxx Wxxx family trust
    Crexxxx P/L as trustee for the Mxxx Wxxx family trust No.2

    each corporate trustee has its own seperate ABN and TFN

    thanks
     
  8. Whiteman

    Whiteman Well-Known Member

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    Hi Paul and Terry

    Thank you very much for your opinions on this matter, based on your answers I'll be digging a bit further into this and getting professional advice based on my specific circumstances.

    Very much appreciated.
     
    Peter_Tersteeg and Terry_w like this.
  9. Hari Yellina

    Hari Yellina Well-Known Member

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    Whiteman,

    Did you find out the answer if they are grouped.

    Thank you
    Hari.