The State Government’s proposed changes to land tax

Public news

The MTA met with State Treasurer, Rob Lucas last week to formally note our opposition to the recently announced changes to the way land tax will be levied in South Australia.

The Treasurer indicated that he is working through the details of the final land tax package and it is scheduled for public consultation next month. We will make a submission as a part of this process before an introduction of the package to State Parliament in September this year for a vote.

Should the changes to land tax go through, it is likely to increase costs for your business, if you own multiple sites.

These concerns were reiterated at a Land Tax forum, which the MTA attended on the weekend among 150 others in attendance.

In previous years, members have legally held their properties in separate trusts to lessen exposure to the highest rates of land tax in the nation. The State Government’s proposal to look through legal entities, like trusts, will identify who the ultimate owner of a property is and aggregate that owner’s holdings together. This will leave those who have legally set up multiple ownership structures facing increases from 1 July 2020.

An example was given at the forum of a property of how a property with land value of $1.3 million would be affected by the changes. Under the changes in South Australia, the land tax paid would be $13,200 per year. Currently in Victoria, the land tax paid on a property of that value would be $5,375 and in NSW, $9,828. It gets worse for a property with land value of $5 million, which in South Australia, under the changes, it would need to pay $151,000 per year in land tax.

Under the proposals in South Australia, the top bracket for land tax will kick in at $1.3 million. In comparison, it’s currently $4 million in NSW and $3 million in Victoria. Any changes to land tax would make South Australia a lot less competitive and will have a negative impact.

Currently, land tax in South Australia works by:

  • Increasing the percentage rate that is paid by an owner increases depending on the total value of property they declare.
  • Having an ability to split properties gives a lower land tax rate for each property, and less tax paid overall.

If you would like to see current land tax rates for one or more properties you own and compare them to what you could be paying under an aggregation, click here to access the State Government’s land tax calculator.

The State Treasurer believes that closing the loophole on “land tax aggregation” could raise an estimated $40 million for the State, starting in 2020, however, Property Council SA Executive Director, Daniel Gannon, has said, “Any suggestion it will be as low as $40 million we think is nonsense. It could be much more than that.”

The Treasurer has stated that he is taking note of the huge amount of feedback that he is receiving and will take this into account. He indicated that whilst the final decision may not please everyone, some of the concerns of members may be alleviated.

You contributions to this submission and our meeting with Labor and SA Best, who have the power to block changes to land tax, similar to shop trading hour deregulation, will be essential to our advocacy.

If you would like to contribute to our submission or would like to express concern over land tax changes, click here to contact the MTA!

Your voice is essential to our advocacy!