Changes that affect your land tax
Your liability for land tax is determined at midnight 30 June (the liability date) each year. Changes to the use of your land or your ownership on or before the liability date may affect your land tax.
The topics below are some common events that affect an owner’s liability for land tax.
- Buying or selling land
- No longer meeting exemption requirements
- Change of residential status
- Changes affecting trustees, companies and deceased estates
Even though your assessment accounts for your land tax liability, it may become payable when you buy or sell property.
Read the public ruling on contracts for the sale and purchase of land (LTA011.1) to find out more about who is liable for land tax when land is under contract.
You are still required to pay your land tax debt after you sell land. We do not adjust your liability if you own land only for part of the year.
Generally, all mortgages and charges over land must be released when you transfer it. As a first charge over land, land tax must be paid.
The payment of unpaid land tax is a matter between you and the buyer, and is normally paid out of settlement funds.
If the buyer takes possession before settlement, we may still assess you as the owner if this is not disclosed on the DNRME Form 24, or settlement is not finalised within 28 days after 30 June.
If the seller hasn’t paid their land tax liability on land you’re buying, their debt may transfer to you. At the time of sale, an owner may not know that they have a liability for that year.
Apply for a land tax clearance search to make sure the land tax is paid. We will either issue you with a clearance certificate, which confirms that no land tax is owing, or advise you of the amount of unpaid land tax required to get a clearance certificate.
We cannot recover unpaid land tax from a purchaser who has received a clearance certificate.
Shirley purchased her second property in June 2013 and became liable for land tax for the first time on 30 June 2013 (for the 2013–14 year). She did not know this at the time, because her land tax assessment notices had yet to be issued.
In August 2013, Anna signed a contract to buy a home from Shirley.
Anna’s solicitor applies for a clearance certificate to check if there is any land tax owing on the land. A liability advice is issued, stating the amount of land tax owing. Anna’s solicitor pays the liability advice from settlement funds and a clearance certificate is issued.
As Anna has a clearance certificate for the land, we can’t seek recovery of Shirley’s land tax debt from Anna.
In January 2014, John signs a contract to buy a home from XYZ Pty Ltd. What John doesn’t know is that XYZ has financial difficulties and has not paid its land tax for 3 years.
John decides to save some money and does not apply for a clearance certificate.
After settlement, XYZ is wound up by one of its creditors.
As John did not obtain a clearance certificate, XYZ's land tax debt can pass to him.
As XYZ Pty Ltd has been wound up, we seek full payment of the debt from John.
Generally, an exemption from land tax will continue to apply until any of the following happens:
- you sell the land
- the land description changes (for example, through rezoning or subdivision)
- you stop meeting the exemption requirements.
You must tell us if you stop meeting the exemption requirements that are outlined on the exemption form. Penalties may apply if you don’t tell us within 1 month after the 30 June where you stopped meeting the requirements.
For example, the requirements for land used:
- as your home—you need to occupy the land and no other land continuously as your home for the 6-month period ending 30 June. If you rent out the property, use it for a non-residential purpose or live elsewhere, you may no longer be eligible for the exemption (except for cases where a transitional home exemption can be claimed)
- for primary production—you must have conducted a business of primary production on the land during the year, including 30 June. You may lose the exemption if
- the nature or size of the business changes
- the business ceases
- you or a beneficiary becomes an absentee (a person who does not usually live in Australia or an external territory).
If your circumstances change, you should tell us in writing as soon as possible. We will determine if the exemption still applies.
We regularly check that owners are still meeting their exemption eligibility requirements.
Find out more about the types of owners for land tax.
Changing your residence status will also affect your eligibility for certain exemptions.
Complete an absentee/resident status declaration (Form LT16) if you move to live overseas or have been out of the Australia for most of the year.
Based on your circumstances, we will then tell you if your resident status changes for land tax purposes.
If you don’t tell us, penalties and interest may apply to your land tax.
On 30 June 2016, Samantha owned land in Queensland with a taxable value of $700,000. As a resident of Australia, she was liable for land tax, because the taxable value of her land was more than $600,000.
On 15 January 2017, she moves to England with the intent to stay for a number of years. Knowing that this may affect her liability for land tax, she lodges a Form LT16 to tell us about her change of resident status.
Because she was not absent from Australia for more than 6 months in the year before 30 June 2016, her 2016–17 land tax assessment will stay the same. However, she will be assessed as an absentee from 30 June 2017 until she notifies us that has returned to live in Australia.
The Office of State Revenue (OSR) calculates land tax using annual land valuations issued by the Department of Natural Resources, Mines and Energy (DNRME).
If DNRME revalues your land, you will receive a maintenance valuation notice. This notice will show the date when the new value takes effect. Your land tax liability will then be recalculated, and a reassessment notice or refund will follow.
When you receive a land tax reassessment notice from OSR, check that the new value for your land was used to calculate its taxable value.
In May 2014, Alan submitted an objection to DNRME against the value of one of his parcels of land, which had been valued at $450,000 since 2011.
DNRME issued a maintenance valuation to Alan confirming its decision to reduce the value of the land to $400,000, effective from 30 June 2012.
Alan has paid land tax on this land since 2011. DNRME supplies an update of the change of value and the date of effect to OSR. Alan’s land tax is reassessed, resulting in a refund for the 2012–13 and 2013–14 years.
Changes can occur that will affect how trustees, companies and representatives of deceased people are assessed for land tax.
Land tax assessments are issued to trustees as the legal owner of taxable land. Although a beneficiary is generally not seen as the owner for land tax purposes, a change in beneficiaries or a new power of appointment may affect the trustee’s eligibility for an exemption.
Eligibility for a home or transitional home exemption depends on all beneficiaries of the trust occupying land as their principal place of residence. If a beneficiary no longer meets the residency requirement, or there is a change in either the beneficiaries or their interest in the trust, the exemption may no longer apply to the land.
Read the public ruling about the home exemption for trustees (LTA041.1) for more information.
If circumstances change, you should tell us in writing as soon as possible. Penalties may apply if you do not notify us within 1 month of the 30 June following the change.
Bankrupt or incapacitated people
Your land tax liability as trustee will be assessed differently if you are trustee for someone who:
- becomes bankrupt under the Bankruptcy Act 1966 (Cwlth)
- is incapacitated, as defined by the Public Trustee Act 1978.
Trustees are liable for land tax if the taxable value of their land is $350,000 or more; in the case of trustees of bankrupt or incapacitated people, the threshold is $600,000. This means that these types of owners may either have a lower amount to pay, or no liability.
Tell us in writing if you become a trustee in these circumstances and are liable for land tax. We will then determine if the higher threshold should apply to your assessment.
Primary production exemption
Where a beneficiary becomes an absentee or ceases to be a relevant proprietary company, the exemption will no longer apply to land owned on behalf of the trust, even if its use is for primary production.
You should tell us in writing as soon as possible if this happens. Penalties may apply if you do not notify us within 1 month of the 30 June following the change.
A company owns land separate from its shareholders or officers. Regular events can occur during the lifespan of a company that will affect how land tax is assessed.
For example, a company that owns land in Queensland with a taxable value of more than $350,000 could change its structure and name, or transfer assets—including land—to a subsidiary.
Because land tax is assessed on an owner’s land at midnight 30 June each year, any changes to the ownership of the land before this date are unimportant—whoever is shown as the owner of the land on the certificate of title on the liability date will be assessed for land tax.
Primary production exemption
A relevant proprietary company—that is, a company with 50 or fewer shareholders that does not sell shares in it to the public—can claim a primary production exemption on land it owns.
If your company has claimed a primary production exemption, but starts selling shares to the public or becomes foreign-owned, the exemption may no longer apply, even if your land is used for primary production.
Tell us in writing if a change of your company affects your eligibility for the primary production exemption, and we will determine if the exemption should still apply.
If the landowner is deceased, the land may still be exempt. Find out more about deceased estates and land tax.