We see land tax mistakes from time to time. While land tax is not a matter from which a tax agent is generally able to advise on it can assist to ensure the tax adviser is a party to land tax review from time to time. Annually ? Common mistakes 1. OSR issue a notice to a trustee. No threshold is given. Client misunderstands structure. A company owns the land. The company shares are owned by a discretionary trust. This is a common development structure. The trustee for the trust isnt the land owner. Just saw one of these again today. $17500 excessive tax was paid. 2. Wrong entity is shown on the assessment. eg Owner of a property is a trust. However the OSR assess the company (trustee) and not a trust. Client has self registered for land tax and chosen the wrong registration type. This may result is a lower assessment but it may lead to a vast underpayment that will accrue. Land tax is a charge and on sale a land tax clearance certificate applies. The OSR also conduct reviews and this may be detected and penalties applied. 3. Wrong ownership %. Property is registered in two names when its owned by one person. Usually detected by OSR but not always 4. Wrong property use. This is common when land ceases to be a main residence. The property may be shown as exempt but should be taxable. Taxpayers often assume that the CGT absence rule also applies to land tax. The land tax rules are far less generous. 5. Not registered. Taxpayer believes its automatic. That applies in some states, not all. The arrears of land tax when issued may now not be able to be deducted as amendment time periods have ended. 6. Incorrect deduction apportionment. A tax deduction issue. Taxpayer owns two properties. One is a holiday home and other is a rental. Taxpayer claims 100% deduction for land tax. Or 50%. The correct process is to apportion the tax by the assessable value and each portion relates to each property. The holiday home is not deductible. The rental is.
Thank you Paul. A lot of good information there. A couple of questions: In Victoria at least, primary producers are exempt from paying land tax but is this the case in all states? I have spent some time reading through the changes to land tax legislation in SA and,as I understand it, some types of commercial/Industrial property are exempt from land tax there?
Primary producers arent exempt owners in any state. Land that is USED in some primary production activities may be exempt land to the owner/s on application. The main residence is generally an allowed exemption but most / all others need to be applied for. Refer to your state OSR website for further information eg https://www.revenuesa.sa.gov.au/__data/assets/file/0013/6322/LTPPA_0317.pdf is a application to apply for SA Land tax exemption for PP use land. Exemptions are a issue to take care with since failing to apply for an exemption can mean the land is taxable by default. eg Boarding houses etc. Exemption from Land Tax - RevenueSA
Unless primary production land use is in and around an urban zone it seems from this information to be exempt Primary production land (PPL) exemption | State Revenue Office
No - Thats Vic law and there are three different urban / rural zones each with different rules (click links) and in each case the USE of the land is a key issue. The exemption must be applied for in each case.
