In welcome news for Australian expats who either own or are looking to invest in property in Queensland, the Queensland State Government has announced in the most recent Budget that Australian citizens and permanent residents will now be treated as residents for land tax purposes. In this update we’ll explore exactly how much this could be saving Australian expats and why it’s a positive outcome.
The absentee land tax rate is set to increase in the new financial year, however Australian citizens and permanent residents will be carved out. Here is the specific quote from the 2019 Queensland State Government Budget release:
“The Government will increase the land tax absentee surcharge rate from 1.5% to 2.0% from 2019-20. The application of the surcharge will also be widened to include foreign corporations and trustees of foreign trusts. These measures are estimated to raise $540 million over four years. The determination of absentee status for land tax purposes will also be adjusted so that Australian citizens and permanent residents are no longer classed as absentees and will be exempt from the absentee surcharge.”
What are the current absentee land tax rules?
The current rules state that an Australian citizen or permanent resident would be considered an absentee if the following criteria are met:
- You were living away from Australia at the 30th June OR
- You have been away from Australia for a period greater than 6 months on a cumulative basis during the financial year ending 30th June.
As an absentee, this means that you can’t claim the property is your primary residence. It’s also important to note that if the value of your land in QLD is greater than $350,000, then you must complete this FORM within 1 month of being offshore.
What are the current absentee land tax rates?
The current tax rates are outlined in the table below. It’s also important to note here that these rates will apply if you own the property through a company or trust also.
There is then the absentee surcharge that must be factored in. This surcharge is calculated as follows:
(Taxable value − $349,999) × 1.5%
Example of absentee land tax rates
Let’s assume that Tom is an Australian citizens living and working in Singapore. He owns an investment property in QLD that is valued at $1.2M, with the land component representing $600,000 of this value. The land tax for Tom would be calculated as follows under the current rules:
- Land value: $600,000
- Land tax = $1,450 + (0.017 x (600,000 – 350,000))
- Land tax = $5,700
- Adding the absentee surcharge = ($600,000 – $349,999) x 0.015
- Absentee surcharge = $3,750
- Total tax due = $9,450
What are the new rates that will apply
As we highlighted above, Australian citizens and permanent residents will now be treated as residents for land tax, and therefore the resident rates will apply. These rates are reflected in the table below:
Example of resident tax rates
Let’s consider our previous example of Tom with his investment property in Queensland. As we outlined the taxable land value of Tom’s property is $600,000, which is the starting point for the taxable threshold. Tom’s new land tax liability will now be nil, which is excellent news for Tom, and a significant saving of $9,450 based on this change.
Overall, this is great news for Australian expats who either already own property in Queensland or are looking to purchase an investment property there. If you have any questions about how this could impact your existing strategy or if you’re looking to purchase property there, please get in touch with our team today.
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