LAND TAX –   on JULY 31 2020 new land tax rules came into effect

From 31st July 2020 the State Government changed the way Land Tax is calculated in South Australia. There have been arguments for a reduction in the rate of Land Tax for many years and since this date things will have changed for some of you who:

• own property in addition to your principal place of residence
• have purchased property in a Trust
• or purchased in a Self Managed Superannuation Fund (SMSF)

From 1st July the top marginal rate in 2020/21 will be reduce to 2.4% if you own the property as an individual or jointly, and the threshold after which Land Tax will be calculated will be increased.

However the change which will most impact for owners of multiple holdings will be the new aggregation provisions. For example before the upcoming changes, land held in different Trusts but with the same Trustee have in the past been assessed separately from each other for Land Tax purposes. RevenueSA provided a mechanism by which owners could notify the Commissioner of State Taxation after Settlement that land was held in Trust and a separate ownership number was issued to each Trust. Now an owner’s interest in every piece of land is aggregated regardless of the ownership structure.

If land is held in Trust the Commissioner of State Taxation now wants to know who the beneficiaries of that Trust are. If this information is not disclosed prior to July 1 2020, or within a certain period of time after acquiring the land, there may be a surcharge applied to the Land Tax being charged.

SO WHAT DO I NEED TO DO IF I HAVE MULTIPLE LAND HOLDINGS?

You should by now have received a letter from RevenueSA directing you to log in and confirm the land you own.  Land holdings for Land Tax purposes are updated once a year on July 1, so don’t be confused if land which you have sold during the 2019/20 financial year appears on the list, or land recently acquired doesn’t. If you no longer own the land simply choose the “I don’t own this land” option. You will also be asked if the land is held on Trust. If the answer is “yes” you will be asked to upload documentary proof of this. Proof can include the Trust Deed, Memorandum of Transfer from the purchase of the land or Minutes or the Tax Returns of the Trust.

If you have property owned by your SMSF then this will fit into a separate category but again you will need the right documents to prove the correct ownership

This information must be given to the Commissioner of State Taxation by 31 July 2020 (extended from mid-June).  As the rules have become so much more complicated it is imperative that you have legal and taxation advice as to how the changes to Land Tax will affect you.  The tax consequences of getting it wrong could be at a significant cost if you do not report land holdings accurately.

RevenueSA can be contacted by phone on 8204 9870 or by email at [email protected] .

Other useful links that will assist you with these new rules are:

For information about the Land Tax Changes:  https://www.revenuesa.sa.gov.au/taxes-and-duties/land-tax

For information relating to Multiple Ownerships: https://www.revenuesa.sa.gov.au/taxes-and-duties/land-tax/land-tax-changes/multiple-ownerships

For Revenue SA’s Land Tax Calculator:    https://www.revenuesa.sa.gov.au/taxes-and-duties/land-tax/estimate-your-land-tax to use  follow this link

We at McKay Business Services are a local South Australian Conveyancing firm and would be more than happy to assist with any queries that you may have.  Please call us at on 08 8333 3525 and we will point you in the right direction.

The team at McKay Business Services are all members of the AICSA and are proud Adelaide Conveyancers