Land tax Nsw: pay now or later?

Discussion in 'Accounting & Tax' started by Poppy, 8th Jul, 2017.

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  1. Poppy

    Poppy Well-Known Member

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    So I'm over the threshold and in NSW the onus is on me to register with OSR. If I don't I probably won't be picked up and won't have to pay until I sell

    A new unit I bought for 1.5mil has a land tax calculation of 1 mil.

    Just say I'm supposed to pay land tax of 15,000pa and I don't, because I don't register.(most Nsw investors don't know and don't bother)

    I sell after 4yr. Just say I have a land tax bill of about 60,000 to pay. Are there penalty costs?? Isn't it better to defer the payment and pay the 60k at sale time, then deduct this off your cgt? This is better and easier than paying it annually and adding that to your annual tax bill. Right or wrong?

    Terry's tax tip suggests I should register and pay upfront.

    https://propertychat.com.au/community/threads/tax-tip-8-forgotten-land-tax.2316/
     
  2. ttn

    ttn Well-Known Member

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    why would you believe that OSR won't pick up until you sell? It could happen this year, next year or whenever. Just say if pick up in year 3, can you manage to come up $45k?
     
  3. Terry_w

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

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    Poppy and wylie like this.
  4. Scott No Mates

    Scott No Mates Well-Known Member

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  5. Poppy

    Poppy Well-Known Member

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    Firstly the NSW OSR won't pick it up as they told me this on the phone.

    Secondly if they did I don't have any cashflow issues, that 45k would be sitting in my redraw so no worries

    Thirdly isn't a deferred bill always better than an upfront payment VV tax? Especially if there are no penalties and if I can simply deduct my final 60k bill from my cap gains?

    Maybe it's more complicated I'm not great at accounting.

    But isn't it deductible either now (30-50 cents in the dollar annually) vs later at sale (@50%?)
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    @Poppy - read the advice above & the penalties and interest charged. Failing to register is a tax default and subject to penalties.

    You may think otherwise.
     
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  7. wylie

    wylie Moderator Staff Member

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    Can I quote this so that it is really clear...
     
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  8. Poppy

    Poppy Well-Known Member

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    Ooohhhh, I get it! Thanks so much.

    realised I'd forgotten to deduct the annual threshold (549,000) from my land tax liability and it's much lower than I thought. I'll register so as to fully comply with my tax abiding obligations.
     
  9. God_of_money

    God_of_money Well-Known Member

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    which accountant that advise the land tax can be deducted from CGT??? Please enlighten me
     
    Last edited: 8th Jul, 2017
  10. Terry_w

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

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    Not sure what you mean with that grammar, but
    See s 110-25 ITAA97
     
  11. Paul@PAS

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

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    If land tax is used as a costbase adjustment and the taxpayer is a resident the benefit may be eroded by 50cents in the dollar due to the general CGT discount.

    And OSR can impose a penalty of up to 90% the amount of the primary tax due AND interest on top. In your case maybe 60%. Penalties are neither deductible or a CGT adjustment.

    Interest and penalty tax | Office of State Revenue
     

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