Land tax debate is over, but what does it mean for investors/trusts?

Land tax has been in the spotlight this year with the topic taking up column inches in all South Australian news outlets for many months. Luckily the matter was finally decided when a new batch of reforms passed through the South Australian Parliament in November.

The reforms, which come into effect in the 20/21 financial year, introduce new land tax aggregation provisions, a surcharge on certain trusts; and a reduction in the top marginal land tax rate. If you own several properties, there may be clauses that affect you.

Here’s a summary of what the new land tax regulations mean.

• A new aggregation of land for land tax purposes will be introduced to look through separate legal structures to determine the true owner of land and will include a shift to aggregation based on an owner’s interest in every piece of land, rather than only aggregating properties held in the same ownership structure. This includes introducing a tax surcharge on land owned in trusts in cases where the interests in land of trust beneficiaries are not disclosed by taxpayers, or cannot be identified.

• The Government will progressively reduce the top land tax rate from 1 July 2020
• This measure will increase the tax-free threshold for land tax up to $450,000 and introduce a new lower marginal land tax rate of 2.9% for the value of ownerships between $1.3 million and $5 million from 1 July 2020.
• The existing top land tax rate for the value of ownerships above $5 million will now be progressively reduced by 0.1 percentage point each year from 3.7% in 2019-20 to 2.9% from 1 July 2027.

Rate Reduction Schedule for land tax above $5 million value

Source: Revenue SA website.

If you are an investor affected by the new land tax regulations, please contact us on 8272 5620 to discuss your current structures and any possible tax implications. We can advise you regarding how you can plan for future investments.