COVID-19: SA Government updates to land tax changes
In January this year we published an article about the South Australian land tax changes. With the recent COVID-19 pandemic, the SA Government has made various updates to the land tax changes which are relevant to all property owners who are considering their land tax position.
Part of the changes that were legislated in October last year allowed for a land tax reform transition fund. This provided staged amounts of concessions over the first 3 years of the package. If an owner had an increase in its land tax liability specifically as a result of the changes, a concession could be claimed. In the first year that concession was 50% of the increase due to the changes. The concession has now been increased to 100%.
Please note that the existing criteria has not changed. Therefore if an owner’s increase is in excess of $50,000.00, the maximum concession available will still remain at $50,000.00. This means that if the increase in land tax is more than $102,500.00, then the owner as the tax payer would not be eligible for relief.
The relief under the concession fund is not provided on the amount that an owner might choose to be payable using the higher “threshold” trust rates of land tax that can be chosen to be payable by a qualifying trust. This is available where land is owned in a (for example) family trust that was in existence before the changes came into effect. Where an owner claims the trust threshold, rather than having the assets of the trust added to a personal assessment, then the concession will also not apply.
There is also a minimum amount of extra tax payable before the fund provides relief, of $2,500.00 in each relevant year.
The existing community housing exemption continues to apply.
Another question which we are asked is whether the amount of land tax may reduce if the value of the properties subject to land tax reduces. This would certainly be the case. However, this would mean that the Government, through the Valuer General, would have to agree that the site value of any particular property would have reduced. This is something that an owner can potentially consider in the new financial year once the new land tax accounts are issued. The Valuer General has announced as at March 2020 that their office has determined to delay implementation of Cycle 2 of the Revaluation Initiative this year as the values now necessitate further review. That initiative may well have led to property value increases but it appears they are recognising the current problems with assessing property values.
Finally, there is also relief for payers of land tax who have 3rd and 4th quarter instalments due in the 2019/20 financial year. The SA Government will allow an owner to defer payment of those amounts for up to 6 months. The usual account that an owner receives for land tax will still be received, and we are advised that the documents will set out the arrangements for the payment deferral. No application is required and there is no requirement to contact Revenue SA about the deferral. However, please note that the deferral only relates to the 3rd and 4th instalments in this financial year and therefore any prior outstanding payments are not deferred.
Johnston Withers Lawyers: Experience You Can Trust
Johnston Withers have a number of lawyers who have studied the new land tax provisions and can advise you on your particular circumstances. If you would like to discuss your land tax queries, contact Andrew Mitchard on (08) 8231 1110 or get in touch online.