Queensland’s ‘generous’ tax system will soon be reformed to level the playing field between local and interstate investors.

As set out in the 2021-22 Budget Update – Fiscal and Economic Review Mid-Year, the Queensland Government is committed to closing the “loophole” in the land tax system, which hinders inter-state investors, particularly those who have investments in other states. bear less liability.

Under the “fairer” land tax regime envisaged in the budget update, tax arrangements will be amended to take into account the total value of land held between states when assessing land tax due.

Here’s an excerpt from the budget update:

A total national taxable land value will be established for each landowner in Queensland, which will continue to exclude exempt land as primary residence.

The National Taxable Value determines the appropriate tax rate which is then applied to the part of Queensland in the value of the person or entity’s land holdings.

Under the current system, a local investor with a $1 million property would pay $4,500 in land tax, significantly higher than the $500 tax required for an investor with $600,000 property in Queensland and a property of $400,000 in New South Wales.

With the new approach, the interstate investor is now charged with a $2,700 land tax in Queensland.

The state government assured that the change will not affect investors who only own land in Queensland.

In addition, the state said investors would still have access to all available exemptions, even with expected policies enacting the reforms.

Tax reform a blow to the sector

Antonia Mercorella, CEO of the Real Estate Institute of Queensland (REIQ), said the announcement of the land tax changes is a “slap in the face” to the sector supporting the local economy.

“This treatment of real estate investors as an endless money pit is outrageous – the government is raking in a huge windfall in stamp duties and then relying on private investors to supply the lion’s share of the housing stock, and now they are beating investors again with new taxes,” Ms Mercorella said. .

The state’s semi-annual budget has shown $5.38 billion in stamp duty so far in the current fiscal year, with an expected final figure of about $16.53 billion to $19.93 billion.

Ms Mercorella said the government had failed to consult with relevant real estate interest groups about this new land tax regime, which was the wrong move at the wrong time.

“From a practical standpoint, it’s also mind-boggling to understand how on earth they plan to get this data to double-tax investors who are already paying this tax elsewhere,” she said.

“There is no other state or territory that takes this approach, and by treating real estate investors with contempt time and time again, investors may very well pull out some stump.”

These reforms, Mercorella believes, would deter potential investors and significantly increase the holding costs of existing investors, resulting in higher rents.

“It shows the government’s inability to think outside the box and come up with alternative and innovative solutions to find new revenue streams,” she said.

“You only have to look at the timing of this explosive law reform to see that the government is clearly trying to sneak this under the radar at a time when most people have clocked out for the year.”

Photo by @frankbusch on Unsplash.

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