Changes to Queensland land tax rules shelved

The Queensland Government has been forced to shelve land tax changes that would have seen investors who own properties in Queensland hit with significant land tax increases. Here is the lowdown.

What were the proposed changes to Queensland land tax rules?

The proposed changes would have allowed the Queensland Government to include the value of investment properties owned in other states when working out how much land tax to charge on Queensland properties.

In a case study on a Queensland Government website showing how it would work, the land tax bill for an investor rose from less than $2,000 per year to more than $8,000 for an investor who owned land in Queensland with a taxable value of $745,000 and land in Victoria worth $1,565,000.

When announcing the changes, Queensland Treasurer Cameron Dick said the new measures would close a land tax ‘loophole’. Mr Dick said because some investors had portfolios spread across different states, they were able to avoid land tax by owning assets below tax-free thresholds in different states. He has sought to justify the measure by categorising investors in Queensland property as “interstate speculators”.

Industry representatives had termed the measures “outrageous” and a “cash grab” by a state government with a budget problem.

Real Estate Institute of Queensland CEO, Antonia Mercorella, had branded the change a “slap in the face” to the one sector which is propping up the state’s economy.

“This treatment of property investors as an endless money pit is outrageous – the government is raking in a huge stamp duty windfall, then relying on private investors to provide the lion’s share of housing supply, and now they’re slapping investors yet again with new taxes,” said Ms Mercorella.

“How can the government possibly justify slugging property investors with tax for land they own that isn’t even within our state borders? It’s utter nonsense that there’s a ‘loophole’ to close.”

Why were the changes shelved?

The Queensland Government doesn’t have access to property ownership records from the other states. So, enforcing the new tax would have required other states to hand that information over – but state leaders resisted. New South Wales Premier, Dominic Perrottet, was particularly vocal about his objection.

Mr Perrottet was quoted as saying: “This is a tax implemented by a state that impacts the residents of NSW. It’s wrong, and we’re not going to comply with it. This is poor financial management by a Labor state government impacting the residents of NSW. No one is safe across the country from Labor’s taxing. They’ve gotten over taxing their own residents and are now trying to tax everybody else across Australia.”

After meeting with state leaders to “get to the bottom” of their concerns, Queensland Premier Annastacia Palaszczuk has had no choice but to dump the controversial changes. She conceded that implementing the new land tax relied on the goodwill of other states, adding “if we can’t get that additional information, I will put that aside”.

Updated by Maria Bekiaris. 

Cover image source: everydayplus/Shutterstock.com

About Terry Ryder

Terry is the founder and Managing Director of hotspotting.com.au, which he created in 2006 to help investors find the best places to buy. Terry has been a specialist researcher and writer on Australian residential property in a career spanning four decades. During that time he has published four books.