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NSW Land tax examples thread

Discussion in 'Accounting & Tax' started by dabbler, 17th Apr, 2016.

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  1. dabbler

    dabbler Well-Known Member

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    Hi All, we had another thread going on Land tax for NSW, it can be quite tricky working out how things will be taxed once you have joint and separate holdings, feel free to post your examples, I will put one below using round figures, feel free to pick it apart or do your own examples, as it may help others plan for NSW purchasing, I won't go into every detail as I am not familiar with every detail or scenario and you should get your own advice and do your own checks not take any post as gospel.

    In NSW, a person, or persons, or entity or any combination on one title is thought of as a "purchaser" and each purchaser gets a threshold. But the calculation for the individuals adds from joint holdings with an allowance for double taxation (read OSR site on double taxation calcs), the below is just an example for people. But you never get 3 full thresholds combined, confusing ? well hopefully this may help clear some confusion.



    So 2 people own 3 properties, for the sake of making it easier to follow, I have changed and rounded the land value amounts.

    property 1 owned jointly by Fred and Jane 500k land value
    property 2 owned by Fred 500k land value
    property 3 owned by Jane 500k land value


    So there should be, for this year, 3 480k thresholds. Calculated as follows.

    Fred & Jane receive the threshold of $482,000 for the property/s they own together $500,000 - $482,000 = $18,000 x 1.6% + $100 (threshold) = $388.00 land tax payable for 2016.

    Fred receives the threshold of $482,000. He owns in his own right LV $500,000 plus his interest in the joint file of $250,000 taxable land value = $750,000. $750,000 - $482,000 = $268,000 x 1.6% = $4288.00 + $100 = $4388.00 land tax payable.
    We then have the secondary deduction of $1462.66. $4388.00 - $1462.66 = $2925.34 land tax payable.

    Jane receives the threshold of $482,000. She owns in her own right LV $500,000 plus her interest in the joint file of $250,000 taxable land value = $750,000. $750,000 - $482,000 = $268,000 x 1.6% = $4288.00 + $100 = $4388.00 land tax payable.
    We then have the secondary deduction of $1462.66. $4388.00 - $1462.66 = $2925.34 land tax payable.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Dabs - that doesn't look correct to me.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I get $4,194 in land tax each.
     
  5. dabbler

    dabbler Well-Known Member

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    lol...I hope it is right, but I will edit if we can find out for sure.

    Is it the double taxation calculation alone that you feel may be off ?
     
  6. dabbler

    dabbler Well-Known Member

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    I just re did the calc manually myself, I too get $4194

    one calc = $1429
    next calc = $194

    So $4288 - $194 + $100 = $4194

    So well spotted and that is why your on the big bux ;-)
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    For the others out there here are my calcs:


    property 1 owned jointly by Fred and Jane 500k land value
    property 2 owned by Fred 500k land value
    property 3 owned by Jane 500k land value



    Total Tax payable property 1

    ($18,000 x 1.6%) + $100 = $388

    Fred’s interest in property 1 $250,000



    Fred’s individual assessment (his share of Property 1 and property 2)

    Fred’s 50% of property 1 $250,000

    Fred’s 100% of property 2 $500,000

    Total land value of Fred’s properties $750,000

    Land Tax Payable on total land value of $750,000 $4,388

    [($750,000 - $482,000) x 1.6%]+ $100 = $4,388



    Minus the deduction to prevent double taxation – whichever is the lesser of calculation i) or ii)

    i) Calc 1



    $250,000/$500,000 x $388 = $194



    ii) Calc 2

    $250,000/750,000 x 4388 = $1,462



    Fred’s allowable deduction is $194 so this total land tax bill will be

    $4,388 - $194 = $4,194



    Jane’s will be the same