In November 2019 there were a number of changes passed by both houses to the Land Tax Act, which will affect many people throughout South Australia. Some of these will result in less land tax, but other situations are far more complex, and should be planned out before the changes come around.
The key base changes are:
- An increase in the tax free threshold to $450,000
- A reduction in the top land tax rate from 3.7% to 2.4% and a top threshold of $1.35 million, increasing to $2 million
- A reduction in the 1.65% marginal land tax rate to 1.25% then 1.00%
- The introduction of a 2.00% marginal land tax rate below the top threshold, and
- The introduction of improved of “improved” aggregation of ownerships for land tax purposes
- Higher rates of tax on land held in certain trust structures
The parts where this does get a lot more complex is with the aggregation rules and the land tax on trust structure changes that are going to be put in place. For people have property in trust structures, it is absolutely crucial that this is planned out as it could have a significant impact on the amount of tax paid. If planned properly it could mean paying zero, whereas if correct beneficiaries are not nominated by the due date, then it could result in thousands of dollars of tax being paid which will not be reversible.
Land tax reforms for trusts
Some key areas in regards to land held in trust structures:
- Trustees have one month from 30 June 2020 to 31st July 2020 to notify Revenue SA of the existence of land held in that trust if they have not already done so.
- Beneficiaries need to be nominated before 31st July 2020
- Each Trust will be separately assessed for land tax purposes, but all land owned by the same trustee for the same trust will be aggregated together
- Higher land tax rates will apply for land held on trust with a value greater than $25,000, where a notice of beneficial interest/unit holdings or a designated beneficiary is not in place.
The above points are only the start of the new legislation. The legislation behind the changes is quite complex and it is important that land owners pay very close attention and receive the advice that they need.
Did you know?
Individuals and partnerships that hold land will now pay less land tax.
Important Date – 31st July 2020
You have up until 31st July 2020 to notify Revenue SA of the existence of land held in a trust.
You have up until 31st July 2020 to nominate a designated beneficiary within a trust for land tax purposes for any land held.
If you are in a company or trust structure which holds land then we highly recommend that you get in contact with us so that we can discuss the best strategy to deal with the new land tax reforms.
Other Resources
Revenue SA – overview of new land tax changes
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Bec Purczel
Principle Accountant
Bec has a wide range of experience in many areas of accounting, and has a deep focus on assisting clients with personalised accounting services that are designed to suit their exact needs.