As of 1 July 2017, a 1.5% land tax surcharge is being imposed by the Queensland Government on absentee land owners. This is known as the absentee land tax.
An ‘absentee’ land owner is not just a foreign owner – it can include Australian citizens who do not ordinarily live or reside in Australia.
If you are living or working overseas, and are currently receiving a land tax bill every year, then this change may affect you!
What land tax is imposed on absentees?
Absentee owners are already taxed differently to resident individual owners. They are taxed at the same rate as a company or trustee; which is a lower starting threshold ($350,000) and higher rate of taxation.
Who does the absentee land tax apply to?
For the purposes of land tax, an absentee is someone who does not ordinarily reside in Australia. The Office of State Revenue will consider several factors to determine whether someone usually lives in Australia during the financial year or not. The amount of time spent in and out of Australia and the reason for the absence, will be relevant.
If a person cannot satisfy the Office of State Revenue that they mainly resided in Australia, they will be deemed an absentee if:
- They were away from Australia at 30 June; or
- They have been away from Australia for more than 6 months in total during the financial year before 30 June.
In limited cases, a person will not be classed as an absentee land owner if the person is:
- a public officer of the Federal or State Government, and is absent in the performance of their duties; or
- working for their employer in Australia for at least 1 continuous year before they go overseas, and are directed by that employer to continue working for them overseas for a period less than 5 years. If the period is longer, they will be reassessed as an absentee for the whole time they are overseas.
What is the new charge to absentee land owners?
From 1 July, absentee owners will have to pay a surcharge of 1.5% for each $1 of taxable land value greater than $349,999. This is in addition to their existing rate of land tax.
It is important to note that this is not a vacancy tax. The land tax surcharge will apply regardless of whether the property(ies) in question are occupied or not, and is in addition to any the vacancy charge that the Federal Government imposes on foreign owners of residential property. For more information on the vacancy charge, see here.
If you have any concerns about the new charge and whether it applies to you, feel free to contact our Property Team to discuss.