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Land Tax Amendment Bill 2005
Land Tax Amendment Bill 2005
Explanatory Notes
General Outline
Policy Objectives
To amend the Land Tax Act 1915 to implement measures announced in the
2005-2006 State Budget.
Reasons for the Bill
The 2005-2006 State Budget proposed that the Land Tax Act 1915 be
amended for the 2005-2006 financial year and later years to:
· replace the existing land tax rate scale with separate rate scales for
natural residents, and companies, absentees and trustees which
provide fewer and broader taxable value bands, rate reductions,
increased thresholds and the incorporation of existing statutory
deductions, thresholds, rebates and the minimum tax payable amount;
and
· introduce a new land tax exemption for land used predominantly as a
moveable dwelling park within the meaning of the Residential
Tenancies Act 1994 and on which more than 50% of the total number
of sites are occupied, or solely available for occupation for residential
purposes, for periods of more than six weeks at a time.
The Bill implements these measures.
Achievement of Objectives
General Measures
Land tax is payable by the owner of any interest in freehold land in
Queensland if the taxable value of all such interests exceeds the relevant
threshold.
The current scheme for determining an owner's taxable value and the
resulting land tax payable is complex. The taxable value of land for an
owner is calculated by deducting any deductions or exemptions from the
aggregated unimproved value of an owner's freehold interests. Land tax is
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Land Tax Amendment Bill 2005
then calculated by applying the relevant land tax rate to the taxable value,
following which any relevant rebates are deducted. Different deductions
and rebates apply depending on the type of land owner.
In addition to any exemptions which may apply, taxpayers who are natural
residents receive a $220,000 statutory deduction in calculating the taxable
value of their land.
An exemption threshold applies to land owned by taxpayers who are
companies, trustees and absentees. If the taxable value of land owned by
these taxpayers is below this amount, the land is exempt from land tax. If
the taxable value is above this amount, land tax is payable on the full value
of the land holdings. A phasing-in rebate alleviates the impact of the value
being just over the exemption threshold. Currently the exemption
threshold is $170,000, and the phasing-in rebate cuts out when the taxable
value reaches $235,000.
All natural residents are entitled to a general rebate equal to 15% of the
land tax payable. In addition, land tax assessments are generally not levied
for tax liabilities of less than $350.
The current land tax rate scale applies equally to all land taxpayers.
However, the application of the various deductions and rebates effectively
results in two separate land tax regimes, one for natural residents and
another for companies, absentees and trustees.
The changes, as announced in the 2005-2006 State Budget, will alleviate
the complexity surrounding the calculation of land tax. In particular, the
Land Tax Act 1915 is to be amended by removing the existing land tax rate
scale and replacing it with two separate land tax rate scales; one for natural
residents and one for companies, absentees and trustees. The new land tax
rate scales will provide fewer and broader taxable value bands, rate
reductions and increased thresholds for all taxpayers. The new land tax
rate scales also incorporate the existing statutory deductions, thresholds,
rebates and the minimum tax payable amount which currently apply.
In addition, the application of the deduction for land used solely for
primary production purposes is to be brought into line with the current
principal place of residence exemption. Currently, if a natural resident
owns primary production land, the resident cannot claim the benefit of the
$220,000 statutory deduction as well as a deduction for the primary
production land. The deduction is also available for an absentee who is an
Australian citizen, a relevant proprietary company, an exempt charitable
institution or a trustee.
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Land Tax Amendment Bill 2005
In contrast, residents may claim the principal place of residence exemption
in all instances where the qualifying conditions of the exemption are
satisfied as well as the statutory deduction. With the incorporation of the
statutory deduction into the new land tax rates, the primary production
deduction will now apply in the same manner as the principal place of
residence exemption, that is, as a separate exemption.
Moveable dwelling park exemption
Section 13(1) of the Land Tax Act 1915 lists various types of land which
are exempt from land tax. Neither caravan parks nor residential parks for
manufactured homes currently receive any specific concessions for land tax
purposes.
The Land Tax Act 1915 is to be amended to provide a land tax exemption
for land used predominantly as a moveable dwelling park within the
meaning of the Residential Tenancies Act 1994 (that is, caravan parks and
residential parks) and on which more than 50% of the total number of sites
are occupied, or solely available for occupation for residential purposes for
periods of more than 6 weeks at a time.
Alternatives to the Bill
The policy objectives can only be achieved by legislative enactment.
Estimated Cost for Government Implementation
Implementation costs are not expected to be significant.
Consistency with Fundamental Legislative Principles
This Bill raises no fundamental legislative principle issues.
Consultation
Consultation on the amendments was not appropriate as the measures are a
Budget initiative. However, the amendments are beneficial for taxpayers.
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Land Tax Amendment Bill 2005
Notes on Provisions
Clause 1 cites the short title of the Bill.
Clause 2 states the date on which the Bill is taken to commence.
Clause 3 states that the Bill amends the Land Tax Act 1915.
Clause 4 amends section 9 by omitting the existing land tax rate scale and
flat rate of tax and makes provision for two land tax rate scales; one for
individuals (otherwise than in the capacity of trustee) who are not an
absentee and one for companies, absentees and trustees.
Clause 5 omits section 9A which provides for the 15% general rebate and
the phasing in rebate.
Clause 6 amends section 11 to remove the $220,000 statutory deduction
whilst maintaining the deduction available to individuals (otherwise than in
the capacity of a trustee) who are not absentees for land used solely for the
business of agriculture, pasturage or dairy farming.
Clause 7 amends section 13 as follows.
· Clause 7(1) omits section 13(1)(i) which provides an exemption
threshold for land owned by companies, section 13(1)(j) which
provides an exemption threshold for land owned by absentees
(otherwise than in the capacity of trustees) and section 13(1)(k) which
provides an exemption threshold for land owned by trustees.
· Clause 7(2) inserts new section 13(1)(o), which provides a new land
tax exemption for land used predominantly as a moveable dwelling
park, where the majority of sites in the park are used for long-term
residential purposes.
· Clause 7(3) renumbers section 13(1)(l) to (o).
· Clause 7(4) inserts a new section 13(5), which contains the definitions
for the new moveable dwelling park exemption in section 13(1)(o),
renumbered as section 13(1)(l). These definitions are drawn from, or
based on definitions used in the Residential Tenancies Act 1994 and
Manufactured Homes (Residential Parks) Act 2003.
Clause 8 amends section 16 to reflect the effect of the new tax thresholds
on taxpayers' obligations for the lodgement of returns.
Clause 9 amends section 18 to omit the minimum tax payable amount for
which the Commissioner need not levy an assessment.
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Land Tax Amendment Bill 2005
Clause 10 amends section 62 to provide that the amendments made by this
Bill apply to land tax levied for the financial year beginning 1 July 2005
and each later financial year.
Clause 11 amends Part 9 of the Act to insert a savings provision in respect
of section 18(4) of the Act. Section 18(4) will continue to apply in respect
of levying land tax payable for a financial year prior to 1 July 2005.
Clause 12 inserts schedule 1 in the Act which contains the new land tax
rates for particular individuals and schedule 2 which contains the new land
tax rates for companies, absentees and trustees.
© State of Queensland 2005