Land tax

Just looked up s 21C
LAND TAX MANAGEMENT ACT 1956 - SECT 21C Liability of lessees of land owned by Crown or council

Lessors of crown or council land in NSW are deemed to be the owners of that land for land tax purposes

 

@Terry_w - fact checking?

I can't understand why tenants on gross leases aren't made aware of these provisions, plenty get caught out after years of occupying a building which has 'cheap rent' and a huge land tax exposure.

 

Yes

 

It would probably be because of negligence by their lawyers!

 

Just because you move in doesnt make it automatic. For example in NSW move in on 18th December and move out on 31 March. The exemption at 31 December is lost. There is a six month rule that they will ensure you meet or accept....You must intend to reside 6mths or more.

Clause 2 of the revenue ruling : Revenue Ruling No. LT 082 Version 5 | Office of State Revenue

It can be a trap too.

 

+1!

 

Agree with you here.

We buy IPs in trusts. We had a trust that I thought had exceeded the Qld Land Tax threshold. But, for years, we never received a bill for Land Tax.

As there is no register of trust names, one of our IPs was assigned to another trust with the same name. It was only when that trust exceeded the threshold (with our IP included) did the error come to light.

The end result was that we were up for 5 years of Land Tax bills. We could have appealed on hardship grounds but it wasn't a simple process.

So we just paid the full amount in the one year and received a larger income tax refund that we were expecting.

 

Have you read this one? You might have to give some of that refund back:
Tax Tip 8: Forgotten land Tax Tax Tip 8: Forgotten land Tax

 

Yes - The former ATO ruling is now contained in the Rental Properties Guide which is a form of public ruling. Searching that document for land tax it states :

When you receive land tax assessments in arrears, the amount of land tax is not deductible in the income year in which you pay the arrears. The land tax amounts are deductible in the respective income years to which the liability for the land tax relates.

The correct approach would be to seek the Commissioners OK to amend outside the 2 year period unless you are a 4 year amendment period taxpayer. If that fails you can only amend the 2 - 3 years depending on assessment date/s. The balance would become a third element CGT costbase element.

What would happen if the ATO found your overclaim ? They would likely find your action reckless and impose a denied deduction (possibly in full) and impose a penalty for being reckless + interest.

 

I just gave it all to our accountants/tax advisors. That is why we pay them the big bucks .

This all happened about 8 to 10 years ago. I do remember being annoyed as I felt we hadn't done anything wrong. I don't remember all the details but we never received a Land Tax bill, then one day we got 5 years of Land Tax charges and the OSR didn't seem that interested in our cashflow issue, even though we felt they caused it.

This was in Qld where one couldn't/can't register for Land Tax. It wouldn't have had happened in NSW as we would have been registered.

 

The ruling and the ATO view doesnt care about registration. It basically considers a landowner can self assess how much the land tax would be if they consider it taxable land. I think the issue of why it was never challenged contradicts the ATO view and has always been a basis for a taxpayer to seek objection to the strict ATO ruling. I think there are grounds to argue why self assessing isnt always possible. eg this case may be a good example.

 

This does not absolve you from guilt if caught.

 

I understand that but I don't pay them to be incompetent.

I can do that on my own and I wouldn't even charge myself .

 

Its taken me years to develop my level of incompetence. - A specialisation

 

I inherited mine and I think I might have passed it onto my children and grandchildren.

If they become accountants/tax advisors, then I will now have proof .

 

Am I understanding land tax correctly?

It is the tax payable if your share exceeds the year's threshold?

I just calculated mine:

$576,400 all in NSW - I looked up Valuer General, and took my share of the properties..

Am I right my amount of land tax payable is $100 + 1.6% x $27,400 = $538.40?

I havnen't even registered, and I owned these properties above the threshold for at least the last two years. OOPS!

 

thats probably right assuming you are the sold owner.

 

Registration is imposed by LAND TAX MANAGEMENT ACT 1956 - SECT 12 Taxpayer to furnish returns
which means you can be liable for arrears amd penalties. By in practice they can remit this. While OSR can impose a limit of 4 years the law provides NO statute of limitations to recovery.

 

I have read the Land Tax Act 2010 (QLD) and I can't find anywhere where it discussed inter-related entities being co-owners of land. E.g. If a property is jointly owned by Company A and Company B, which results in each company's share of the land falling below the $350K threshold. What if Company A is a wholly owned subsidiary of Company B? Or if both companies are owned by a trust? Are they assessed as a single consolidated entity or separate entities?

 

Look up joint owners. From memory around section 70.

I don't think there are any aggregation provisions like in Nsw for related companies.