Queensland property investors will be hit by land tax increases of thousands of dollars a year under the Palaszczuk government’s controversial multi-jurisdictional land tax change, despite Treasurer Cameron Dick late last year promising it would only affect interstate landholders.
As investors and property industry organisations called for the new tax to be dumped before its introduction next year, Queensland owners are now working out how they will be stung by the tax.
Brisbane resident Gerard, who did not want to his surname published, said he was stunned when he worked out his land tax bill would increase almost five-fold under the new scheme.
Gerard and his wife own four properties, including their principal place of residence in Brisbane (which is exempt from land tax), a property in NSW, an investment property in Brisbane and on the Sunshine Coast.
They previously only paid $525 a year in land tax, but under the new scheme it will increase to more than $2500 a year.
The investment property on the Sunshine Coast was bought in early December last year, only days before Mr Dick announced the new tax regime in the mid-year budget update.
Gerard said they might have reconsidered the purchase of the Sunshine Coast property if they were made aware of the land tax change, which accounted for interstate property assets when a Queensland tax bill was assessed.
Closing a ‘loophole’
“We would have made the decision in full knowledge that we would have to pay more land tax. It’s a significant increase. They didn’t tell us. It makes us a little bit mad,” Gerard told AFR Weekend.
“Like most investors we borrowed a significant amount of money and did so on the current tax system. We don’t have the cash flow to absorb the increase, so we’ll have to pass it onto our tenants.”
When Mr Dick announced the land tax change in December last year, he said he was closing a land tax “loophole” that allowed interstate investors with properties across multiple states to access tax-free and progressive rate thresholds multiple times.
He said the land tax adjustment – which would only affect interstate investors with a number of properties in different states – would make the system “fairer and more equitable”.
“This sensible, prudent reform means interstate investors get treated the same as Queensland investors, wherever they live and wherever they own property,” he said in December.
But Gerard, who lives in Brisbane’s western suburbs, said many Queenslanders were now realising they were going to be slugged by the new tax.
“There will be a large amount of Queenslanders affected by this including people who have moved to Queensland in recent years and still have property investments in southern states,” he said.
A spokesman for Mr Dick acknowledged this week the tax change would affect some Queensland investors.
The Palaszczuk government has refused to release the modelling used to justify the new tax, only saying it would affect about 10,000 landholders and raise about $20 million a year from 2023-24.
In an Australian-first, landholders will have to disclose their interstate holdings voluntarily in other states before being taxed for their Queensland holdings.
Critics say the scheme is a form of double taxation and will push up rents and deter investors from Queensland.
Treasurer’s warning
A spokesman for Mr Dick this week said investors had more than 500 days to get their investment portfolios in order before the tax kicked in.
But Property Council of Australia’s Queensland executive director, Jen Williams, said it remained unclear how the Palaszczuk government was going to collect the “unorthodox” tax given it required the goodwill of interstate revenue offices to help assess landholder’s assets.
She said she had requested a meeting with the Treasurer since the policy was announced late last year, and questions about particular aspects of the tax remain unanswered.
“At a time where the state is in the midst of a housing supply and affordability crisis, it appears counterintuitive to introduce any adjustment, or for that matter any new tax, upon the industry,” she said.
NSW Finance Minister Damien Tudehope this week questioned the constitutionality of the new land tax regime, saying they had not had any requests from Queensland to share information.
After Friday’s treasurer’s meeting, South Australian Treasurer Stephen Mullighan said they wouldn’t be wouldn’t be going down the Queensland path.
“The SA Government has committed to no new taxes and has no intention of following Queensland’s lead,” he said. With Simon Evans.
Article source: www.afr.com
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