The South Australian Government has legislated significant changes to the land tax regime.
The previous system applies land tax based on the legal ownership of the land. This resulted in valid complex landholding structures to reduce the land tax charged. Under these types of arrangements each separate legal owner receives the exemption threshold, thereby reducing the overall land tax paid compared to a single owner position.
The new legislation seeks to circumvent these types of arrangements by introducing improved aggregation, grouping and surcharge provisions to remove the benefits which were available under these arrangements. The specific measures will include:
- Aggregating the total value of land held by taxpayers (e.g. 100% of Property A plus 50% of Property B)
- Grouping related companies; and
- Introducing a surcharge for land held in trusts where beneficiaries can't be determined or are not disclosed. There will be exceptions for certain trusts including special disability trusts, deceased estates, guardianship trusts and complying superannuation funds.
These measures are aimed at ensuring that all land held by the underlying owners are aggregated for land tax purposes. Where the underlying ownership cannot be determined, or is not shown (i.e. for trusts), the new surcharge will ensure that these entities pay a higher rate of land tax.
||$25,001 - $450,000
||$450,001 - $755,000
||$755,001 - $1,098,000
||$1,098,001 - $1,350,000
||0.5% value over $450,000
||$1,525 + 1.25% for value over $755,000
||$5,813 + 2% for value over $1,098,000
||$10,853 + 2.4% for value over $1,350,000
|Trust Surcharge Rates
||$125 + 0.5% value over $25,000
||$2,250 + 1.0% for value over $450,000
||$5,300 + 1.75% for value over $755,000
||$11,303 + 2.4% for value over $1,098,000
||$17,351 + 2.4% for value over $1,350,000
SA Key Changes
Top marginal rate reduced from 3.7% to 2.4%.
Top land tax threshold increase to $1,350,000 with further increase to $2,000,000 from 1 July 2022.
Exempt threshold increase from $391,000 to $450,000 for all but unnominated trusts.
A trust can avoid the surcharge rates if it elects to nominate the beneficiaries of the trust. The deadline for nominating beneficiaries of the trust is 30 June 2021. This only applies to land already held by the trust on 16 October 2019.
A transition fund has been introduced for the first 3 years of the new regime to provide relief for individuals and company groups with land tax greater than $2,500.
Further concessions are available for developers. Developers trading through a Company may apply to the Commissioner to be exempted from aggregation where the land held is for developing at least 10 residential allotments or for development of affordable housing.
The exemptions for land tax remain for main residence and land used for primary production purposes.
Please contact Brentnalls SA for more details on any of the above and how it will affect you.
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The information provided in this information sheet does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.