Queensland Absentee Land Tax: What you need to know

Land tax hikes, introduced during the Queensland government’s June budget announcement, have been rather dramatically withdrawn following fears foreign land investors would abandon Queensland. The hike, from 1.5% to 2%, went hand-in-hand with a widening of the definition to include foreign companies and trusts. Altogether, this change was expected to bring in an extra $540,000,000 over the next four years. Now that some changes — such as the widening of the definition — have been rolled back, the estimated land tax revenue has been rolled back to $291,000,000 which has widely been regarded as a win for the Queensland property market.

The compromise on the changes was reached after strong lobbying from the Property Council of Australia and many involved in the property industry. This is because overseas investors play a large role in the Queensland property industry, and the tax changes risked disincentivising investment and hindering growth in the state. The exemptions are now expected to align with those in Victoria, although the exact changes won’t be revealed until early 2020. Ultimately, Treasurer Jackie Trad said that “it will be a decrease in income but the offset of that is guaranteed investment, guaranteed jobs and guaranteed economic activity around these projects.”

What is the absentee land tax?

The absentee land tax applies to foreign owners and Australian citizens who do not ordinarily reside in the country. Absentee owners are taxed at the same rate as a company or trustee, which means there is a lower starting threshold and a higher rate of taxation.

Who does the absentee land tax apply to?

As we said, the absentee land tax applies to people who do not ordinarily reside in Australia. This is determined by a number of factors, but usually comes down to:

  • The amount of time spent in the country per financial year, plus
  • The amount of time spent out of the country and the reasons for the absences.

If the Office of State Revenue cannot determine if a person is mainly a resident of Australia using the above criteria, they will be deemed an absentee if:

  • They were away from Australia at June 30, or
  • They have been away from Australia for more than 6 months in total during the financial year before June 30.

Of course, there are some exceptions to this rule. Primarily, Australian citizens and permanent visa holders are not deemed absentees. Officials working for the State or Federal Governments in overseas positions are exempt, as are employees who previously worked in Australia for at least 1 year with their current employer before they went overseas and are directed by that employer to continue working for them overseas for a period less than 5 years. If the period is longer, they will be reassessed as an absentee for the whole time they are overseas.

How much do I have to pay with absentee land tax?

This is how the surcharge is calculated: (Taxable value − $350,000) × 2%

As an example, if you owned land worth $600,000, then you could expect to pay $5,000 in absentee land tax.

What does this all mean for me?

Well, it mostly means that the property industry will behave as it did before, although some foreign investors may decide to scale back their involvement a little. Local residents can expect everything to remain pretty much the same.

Written: 24 December 2019

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