May 2024

A guide to land tax across the states

Victorian businesses may see a larger tax bill this year if they own land in the business's name, with new land tax thresholds in place in 2024.

Land tax is an annual tax paid to state and territory governments by land owners. If your business owns the property, you will likely need to or have paid land tax on it, depending on the value of the land.

Commencing this year, the land tax threshold in Victoria has been temporarily reduced to $50,000, while the $25,000 threshold for trusts remains unaltered. If the total taxable value of all your Victorian properties (excluding exempt ones) as of 31 December meets or exceeds this threshold, you’ll be issued a land tax assessment.

For some Victorians, this may be the first year they receive a land tax bill.  

The amount of land tax you pay depends on the combined unimproved value of your taxable property. There may be different assessments, depending on how the land is owned (such as individual, trust, joint owner, etc.).

In most states and territories, you don’t usually have to pay land tax on your main home (permanent residence). In some cases, land owned by some organisation types can be exempt from land tax.

There may also be a foreign investor land tax surcharge if you are not an Australian citizen or resident and own land that is not your primary place of residence.

How is land tax generally treated on a return

Land tax liabilities might be deductible, contingent upon when the obligation arises. The timing of your liability to pay land tax hinges on the applicable state laws.

Your obligation to pay land tax isn’t contingent upon filing a land tax return or the taxing authority issuing an assessment. In many states, the year in which the property is utilised for relevant purposes determines your liability, irrespective of whether an assessment is issued later.

When you receive land tax assessments in arrears, the land tax amount isn’t deductible in the income year when you pay the arrears. Instead, it’s deductible in the respective income years to which the land tax liability pertains.

If a landowner gets a land tax assessment for a year, and later in the same financial year either sells the property or begins using it as their residence, there’s no need to divide the land tax deduction.

The Australian Taxation Office (ATO) considers that the land tax liability was incurred for an income-producing purpose because it was based on the property’s use for income generation.

In the event of a property sale with a land tax adjustment, the seller should declare the recovered amount as rental income.

Land tax in other states
Land taxes in Australia
How can we help?

Land tax liability can be a complicated subject, particularly if this is your first year having to report it. As your registered tax agent, we are only able to advise based on federal tax legislation and measures whereas Land Tax is a State Tax.

However, we can provide you with this information to help you further your knowledge and understanding. A legal professional may be better able to assist you specifically with this specific area, such as a solicitor.

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