Yikes! Land Tax 2018

We just received the first round of Land Tax for 2018.

Increases of between 15 & 20% portfolio wide. The $629,000 threshold does little to relieve the 5 digit bill.

Has it been as painful for others invested in the Sydney market?

 

It got expensive for my parents in Adelaide where they got charged land tax on thier home! They have completed and posted the exemption from too. Not cool LTO. Not cool.

 

Yes land tax in Syd is not pretty. But still, for the returns it's given us over the last 5 years we can't complain too much.

 

My post on the need for current rent reviews v's rising costs : Rent reviews

Land tax will worsen and not improve. The one key issue that can give comfort - Land tax normally is a sign of rising land value.

 

I had an email from Topdocs last week that said assessments for (discretionary?) trusts will automatically include the foreign person surcharge, and that you need to apply for the usual rate. - is this obvious when you receive the assessment? Or is NSW OSR going to get another windfall gain?

This isn't the email, just an article from their website (and I have no association with them!)
Foreign Person Exclusion

 

I dont believe that to be the case. OSR would have no lawful basis to determine a trust has potentially affected beneficiaries unless they consider the family tree of the primary beneficiaries and appointors. The onus is however on the taxpayer (trustee) to satisfy the OSR of the concern. On request some trusts could face penalties and arrears. OSR have always taken the view a deed amendment should be made prior to the taxing date. - not after. And to be honest in some cases it may be like shooting fish in a barrel...ie foreign sounding names !!

There is the possibility some document providers will raise a scare campaign. However if a trust has no offshore relationships whatsoever I see no basis for being obliged to amend the deed. The trust has no potential beneficiaries to trigger the surcharge as a matter of fact. That is the key issue - Many trusts will have possible beneficiaries (eg parents, uncles, aunts etc) who are non-resident. They should consider amending I believe.

OSR will need to refer to ancestry.com perhaps ??

 

According to my landtax bill, my Darlinghurst apartment land value has gone up 20.5% since 2017 and 52% since 2016...that really seems a bit steep to me.

 

Lucky when the market goes sideways or down they don't charge us at least!

 

Not just for the Sydney market!
Is horrible in Melbourne too.
I HATE getting those land tax letters....

 

Mines quite painless this year, comparatively speaking. That's only because we don't own as much as before though.

 

I think (roughly recall) it gets adjusted on a 3 year average basis. So if the land value goes down after 3 years then tax should be less I guess. Anyway I've only ever paid increasing land tax.. I just look at it as an unavoidable evil in this business.

 

Sold a property in December that had a 7 figure land tax on it, so not as painful this year.

 

One benefit to having property in Perth atm...

 

Smug aint ya...

 

Perth and Adelaide have better thresholds.

Get done over on Canberra props though.

 

I LOVE it.......It means you are getting richer

 

This is the full text of the email from TopDocs, with my highlight:

Your client’s discretionary trusts and the NSW land tax surcharge

Did you know that the NSW Office of State Revenue automatically applies a foreign person land tax surcharge to all discretionary trusts that hold land in NSW, irrespective of whether they have foreign persons in their beneficiary pool?

This means, that in the 2017 land tax year, it is likely that a number of your clients would have paid the land tax surcharge by default. It also means the same clients will be subject to this surcharge in the 2018 land tax year.

The good news is that you can assist your clients to become exempt from this surcharge, and in certain cases, obtain a refund of the land tax surcharge paid in the 2017 land tax year, by having their trust deed amended to specifically exclude foreign persons as beneficiaries of the Trust.

Applying for a refund of the 2017 land tax surcharge | Ensuring exemption from the 2018 surcharge

To be eligible for a refund of the 2017 land tax surcharge, the trust must have paid their full 2017 land tax assessment amount, then the trustees must:



apply for an exemption from the surcharge with the NSW OSR; and



have their trust deed amended to specifically exclude foreign persons as beneficiaries of the trust;

within 6 months of issue date of their 2017 land tax assessment notice.

If the 2017 land tax assessment notice was issued outside of this period, the trustees may instead seek exemption from the surcharge in the 2018 year and beyond.

Topdocs’ Foreign Person Exclusion documentation

Topdocs can assist your clients to be eligible for exemption from the NSW land tax surcharge by amending their discretionary trust deeds to specifically exclude foreign persons as beneficiaries of the trust. Our foreign person exclusion documentation is individually signed off by the lawyers at Topdocs Legal, ensuring each and every amendment you receive is valid and effective.

Bulk pricing also applies for multiple orders.

For more information on this documentation, and how it can assist your clients to become exempt from this surcharge, please visit our website or call a Topdocs consultant on 1300 659 242.



Complimentary client marketing kit

We have prepared a brochure and editable letter that you can send to your clients explaining the land tax surcharge and the benefits of amending their trust deed to exclude foreign persons.

This client marketing kit can also be branded in your corporate colours.

You can request a complimentary copy of this kit by clicking on the button below:



Attend our webinar to learn more

We are conducting a complimentary webinar that outlines the stamp duty and land tax surcharges that have been introduced in NSW, VIC, QLD and SA, and the means by which some of these surcharges may be avoided.

You can register for this CPD accredited webinar below.

DETAILS


Date:

Wednesday, 21 February 2018






Time:

2:00am - 2:30pm AEDT


Title:

Discretionary Trusts and the Land Tax and Stamp Duty Surcharges – Update


CPD:

0.5 points


Cost:

Free


Presenter:

Michael Roberts, Special Counsel, Topdocs Legal

Best regards,

The Topdocs Team
T: 1300 659 242​

 

I would question the NSW Commissioners capacity in law in making such an assessment. Most ( ? many) trusts will have no parties whatsoever who are or could be a foreign person and the deed remains valid and the trustee is incapable of making a foreign person a beneficiary in any event. Why would deed need amending if the trustee cannot make a foreign person beneficiary already ?

I hope someone takes this to appeal and appeals the Commissioners powers to make an arbitrary assessment. Like the german guys with funny symbols on their clothes in the 30s and 40s who ran a kangaroo court and labelled people.

The Commissioner could also do same with every company land tax assessment and until all taxpayers cannot prove a group the debt is payable. Or tax all homes and enforce the debts until owners prove they occupy the premises as their home - I have never told OSR I live in my home !!

Loads of other examples are possible.

 

I think most discretionary trusts wtih open class beneficiaries would have multiple beneficiaries meeting the definition of foreign persons - a primary beneficiary marries a north korean for example.

I don't see any legal issues in considering a trust a foreign person until proved otherwise.

 

whoa, really? Thats a bit harsh.