Join Australia's most dynamic and respected property investment community

QLD, Land Tax, where to notify?

Discussion in 'Accounting & Tax' started by Eric Wu, 13th Jan, 2016.

Tags:
  1. Eric Wu

    Eric Wu Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    354
    Location:
    Australia
    Hi guys

    if you bought a few IPs in QLD last year, do you need to notify SOR for land tax purpose? and if you bought one in Family Trust, do you need to notify as well?

    regards
     
  2. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    Yes. Yes. Whether it exceeds thresholds isn't important. Register to avoid forgetting.
    Google OSR Qld.
     
    Eric Wu likes this.
  3. jaybean

    jaybean Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    981
    Location:
    Melbourne
    How does this work. I read elsewhere that if you don't register they won't know and you'll end up paying penalties. I never registered yet I got a letter when the time came.
     
  4. Eric Wu

    Eric Wu Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    354
    Location:
    Australia
    thanks Paul, will do it shortly
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    I did some conveyancing last year and the seller hadn't paid land tax for about 7 years. This had to be paid in one lump sum at settlement, which added up for a large amount. But the tax laws, or the ATO's interpretation, mean that this land tax was not claimable because land tax needs to be claimed in the year it is incurred, which is each year when it falls due.. Tax Tip 8: Forgotten land Tax

    So best to register and to make sure you pay yearly when required.
     
    Eric Wu likes this.
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    All land sales require a land tax clearance to permit transfer to the buyer so its fairly inevitable and the deduction problem with arrears is unfortunately common. Land tax is a charge over the land so they will just take it from sale proceeds (and any penalty). The OSR NSW limit the arrears to 4 years but can double the tax as a penalty.

    OSRs are getting better at detection but its not foolproof. Many buyers assume their lawyer or conveyancer registers them when title changes or that an automated system exists (like rates). Onus is solely on buyer to know about land tax amd register.
     
    Eric Wu likes this.
  7. Eric Wu

    Eric Wu Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    354
    Location:
    Australia
    Thanks Terry, good to know
     
  8. EN710

    EN710 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,162
    Location:
    NSW
    Um? I usually got this periodic mail from OSR mentioning their valuation of my QLD land. Does that mean I no longer need to register?
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    I spoke to another former broking client last year who I helped for finance for a trust purchase about 10 years ago. NSW property with corporate trustee. I mentioned land tax and he basically said "whats that". He hasn't registered and the OSR don't realise the company is acting as trustee so they are not issuing notices. The trust would owe about $32k - and his cashflow positive property is probably cashflow negative.
     
  10. jaybean

    jaybean Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    981
    Location:
    Melbourne
    Yes but my question is how did they find me without registering while others have to register. I mean I'm glad I didn't have to do anything but in curious.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    I wasn't answering your question here, just making an observation.

    They probably have a notice of sale at settlement which notifies them. Others may get away with it because of luck basically. I can't explain it.
     
  12. jaybean

    jaybean Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    981
    Location:
    Melbourne
    Ok thanks. Anyway it's for the better. As you said, I'd lose the tax deductibility otherwise.
     
    Terry_w likes this.
  13. Eric Wu

    Eric Wu Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    354
    Location:
    Australia
    Just Spoken to OSR QLD, they have advised me that when the titles transferred to current owner, the OSR will automatically assess the land value of the overall holding and issuing notice if land tax needs to be paid. no actions need to be taken by new owners.

    OSR QLD really works differently from OSR NSW, in NSW owners have to notify OSR, while in QLD, just sit and waiting, they do the work. love QLD.
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    Thanks for reporting back. In that case how do they know a person is acting as trustee I wonder.
     
  15. Eric Wu

    Eric Wu Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    354
    Location:
    Australia
    I did not ask that question, but I only have one in our trust
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    Does the OSR know?
     
  17. Propagate

    Propagate Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    283
    Location:
    Melbourne
    We bought 2 properties in NSW in 2013 and didn't register with NSW OSR.

    Within 6 months of the purchase of the 2nd property we had a land tax bill from NSW OSR listing both properties, so they must also have some kind of system in place similar to QLD. Not saying they'd catch-all, but they found us (not that we were hiding).
     
    Eric Wu likes this.
  18. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    In NSW there is the eNOS - electronic notice of sale. Which must be completed to settle. This, I think, notifies the OSR. But registration is still important because they may have the wrong address, or not show trusts etc.
     
  19. Eric Wu

    Eric Wu Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    354
    Location:
    Australia
    no they don't
     
  20. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,043
    Location:
    Sydney
    If may not effect you if the value of the land is less than $350k, but if it is over you may not be getting charged the right land tax rate.
     
    Eric Wu likes this.