The Queensland Government has recently announced changes to the way in which land tax is calculated in Queensland. Those changes will take effect from 30 June 2023.

The Current Regime

Currently land tax in Queensland is levied on the aggregate value of all properties owned by a landowner in Queensland as at 30 June each year. The relevant value for land tax calculation is based on the annual statutory valuations issued by the Valuer-General's office.

A landowner will be liable to pay land tax if the total taxable value of their land exceeds the relevant thresholds. Currently, the land tax thresholds in Queensland are:

(a) of $350,000.00 in the case of absentee's, companies, trusts and superannuation funds; or

(b) $600,000.00 in the case of individuals.

There are a number of exemptions that are available for different kinds of land holdings in Queensland, the most common being the exemption for a landowner's home. When an exemption is applied, the value of that parcel of land is excluded from the taxable value of the landowner's total property holdings.

The Queensland Revenue Office applies a tiered tax rate, depending on the taxable value of an owner's land. For individuals, the rates of land tax are:

Total Taxable Value Rate of Tax
$0–$599,999 $0
$600,000–$999,999 $500 plus 1 cent for each $1 more than $600,000
$1,000,000–$2,999,999 $4,500 plus 1.65 cents for each $1 more than $1,000,000
$3,000,000–$4,999,999 $37,500 plus 1.25 cents for each $1 more than $3,000,000
$5,000,000–$9,999,999 $62,500 plus 1.75 cents for each $1 more than $5,000,000
$10,000,000 or more $150,000 plus 2.25 cents for each $1 more than $10,000,000

For companies and trustees, the rates of land tax are:

Total Taxable Value Rate of Tax
$0–$349,999 $0
$350,000–$2,249,999 $1,450 plus 1.7 cents for each $1 more than $350,000
$2,250,000–$4,999,999 $33,750 plus 1.5 cents for each $1 more than $2,250,000
$5,000,000–$9,999,999 $75,000 plus 2.25 cents for each $1 more than $5,000,000
$10,000,000 or more $187,500 plus 2.75 cents for each $1 more than $10,000,000

Absentee landowners are charged land tax at a slightly different rate again, and are levied with an additional 2% absentee surcharge.

The New Regime

From 30 June 2023, land tax on an owner's Queensland landholdings will be calculated having regard to the taxable value of all land owned by that landowner in Australia.

This is to say that, when determining:

(a) if a landowner has reached the tax-free threshold; and

(b) which rate of tax applies to that landowner,

the QRO will adopt an aggregate taxable value that includes the landowner's interstate landholdings.

There appears to be some degree of misconception amongst the public that the Queensland State Government is intending to levy land tax on property holdings held in other states. That is not the case. It's simply that interstate landholdings will now be included in the calculation of each landowner's aggregate taxable value, when land tax is calculated on property owned in Queensland.

This is a unique approach that is not currently being applied by any other jurisdiction in Australia. It will likely result in a substantial increase in the amount of tax paid by Queensland landowners who also hold land in other states. These changes will not affect Queensland residents who own land interstate (but not in Queensland). It will also not affect Queensland landowners who do not own land interstate.

The Calculation

This calculation of land tax under the new regime will be a multi-stepped process. Under the new rules, taxable value of land owner in Queensland will be calculated by:-

(a) Determining a landowner's theoretical land tax liability, calculated on the taxable value of all property held by that owner anywhere in Australia (adopting the threshold's and rates outlined above; then

(b) Calculating what percentage of the Australia wide taxable value relates to Queensland land; and then

(c) Multiplying that percentage by the total hypothetical land tax liability to determine the land tax payable on the landowner's Queensland landholdings.

The new regime is particularly complicated in that Queensland land tax exemption rules must be applied in assessing whether interstate landholdings are exempt for the purpose of calculation of land tax in Queensland (regardless of whether those interstate parcels are exempt from land tax in their native jurisdiction, or not). So, it is possible that you might, for example, have a scenario where land is exempt from land tax in NSW, but still needs to be include in determining the total taxable value of the landowner's land in Queensland.

What Queensland Landowners Can Do

The changes to the land tax regime in Queensland will make it more important than ever for clients acquiring land in Queensland to obtain proper legal advice before signing a purchase contract; effective structuring strategies should in most cases be able to largely avoid the punitive effect of the new regime. Existing landholders who are substantially affected should also consider whether there are any potential restructuring options available to them to minimise the burden of their increased land tax bill each year.