Tax Tip 8: Forgotten land Tax

Discussion in 'Accounting & Tax' started by Terry_w, 1st Aug, 2015.

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  1. Terry_w

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

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    No a loss doesn't mean land tax not payable. Not sure what I meant by that comment now.
     
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  2. Paul@PAS

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

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    There is a correlation between some trusts paying land tax and having a tax loss. Land tax in some states for some trusts can be very high and reflect as a significant outgoing. eg NSW.

    In NSW the additional cost for land tax for a Disc Trust is approx $10K. I have found people who didnt register their trust property for land tax. They get pinged $10K+ for three or four years PLUS OSR asks for the trust deed. And then imposes land tax surcharge on the same trust for each applicable year.
     
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  3. Yann

    Yann Well-Known Member

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    Thanks Terry and Paul for the clarifications. Land tax will then remain a cost of doing business in NSW.
     
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  4. Never giveup

    Never giveup Well-Known Member

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    How should I findout uf I need to pay land tax?

    Last year purchased property and so far only got Notice of Valuation.

    Does it mean we dont have to pay any land tax?
     
  5. Terry_w

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

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    Is the valuation over the threshold?
     
  6. Paul@PAS

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

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    Depends on the state. I believe its automatic in QLD (QLD land!) but most other states you must register (online). If nothing is due it wont be missed. Assessments only isssue when $$$ are due. Being registered can avoid forgetfulness and penalties. Land tax clearance and arrears becoming due is a requirement when selling so its hard to avoid land tax. And by being registsred you cant miss the deduction either
     
  7. FredBear

    FredBear Well-Known Member

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    In NSW I still get land tax assessment notices that state:

    "Total balance of assessment $0.00"
    "Exempt Land used and occupied as the principal place of residence"

    It seems that once you have been registered you never become unregistered - if you move back in and claim the exemption you continue to receive annual notices that show that the amount due is $0.
     
  8. Never giveup

    Never giveup Well-Known Member

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    @Terry_w what is the defination of threshold in this context?

    @Paul@PFI - we bought the prop in NSW by Auction in June 2019 and settlement was on 22nd July. The notice if valuation we received couple of montgs ago has a date of 1st july but thete is no prompt info re land tax payment.

    Do you suggest that I should register with land/Revenue department?
     
    Last edited: 4th Jun, 2020
  9. Terry_w

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

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    in 2020 the general land tax threshold for NSW is $734,000
     
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  10. Never giveup

    Never giveup Well-Known Member

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    From Revenue website :-
    "Your principal place of residence is exempt,"

    We bought to live (PPOR) so no need to pay :)
     
  11. AlbertWT

    AlbertWT Well-Known Member

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    How and where do we register it for land tax in NSW?
    Because initially, I'm under the impression that the tax will be calculated based on the land size for IP in NSW by OSR.
     
  12. AlbertWT

    AlbertWT Well-Known Member

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    Would there be any penalty or interest when we forgot or didn't know to register for the Land Tax?
     
  13. Never giveup

    Never giveup Well-Known Member

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  14. Chabs

    Chabs Well-Known Member

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    @Terry_w what are the penalties and additional fees for land tax that hasn’t been paid for a number of years? :confused:
     
  15. Paul@PAS

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

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    Interest is the first stage penalty. They can also impose a higher penalty as a % of the tax but this is quite rare and generally occurs when a owner has a long period on not being asssessed and OSR can only assess the past three years. So in lieu of say 8 years of unpaid tax OSR may apply a penalty and interest to each. .

    Interest and penalty tax
     
  16. Terry_w

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

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    I don't know off the top of my head but the relevant legislation would be the Taxation Administration Act NSW.

    Generally they will only chase a few years worth, maybe 4 or 5. Not sure what the limitation is
     
  17. Paul@PAS

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

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    Depends on dates. Its something to do with rights of appeal in a tribunal I believe. The OSR used to have its board meetings in a firm I worked at and I asked the question of their legal counsel / consultant once approx 20+ years back. Typically the NSW OSR will assess 3 years depending when they notices are dated and issued. Sometimes 4. There is a way they can assess many more years but it is limited to fraud / evasion which tests that the taxpayer evaded rather than was negligent or reckless etc. Given land registries are a controlled issue I havent seen a case where evasion could apply. BUT lets say a company registered yet the land is actually held on trust for a disc trust. That could be evasion if the benefit of a threshold was incorrectly claimed. Hard to prove intention.

    The correct answer is the taxpayer in NSW is obliged to register and in doing so they cant incur arrears as the assessment follow adminstrative practice. The Commisisoner can also impose a penalty of 100 penalty units. Havent seen that either.

    Terry you may find Part 6 Div 2 of the TAA 1996 interesting. It appears to grant the Commissioner power to disregard law on taxpayer request. I had involvement in such a matter. That was successful. It was used to avoid costly legal action
     
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  18. Terry_w

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

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    The land tax could be a cost base expense if you are unable to claim it
     
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  19. whatthefutureholds

    whatthefutureholds New Member

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  20. Terry_w

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

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    You have linked an article about the 6 year rule for CGT. this is not connected to land tax. Land tax could still be payable. There is a 6 year rule for land tax too, but it won't apply if the property is rented out.