Land Tax Changes | What You Need to Know

Since the South Australian Government has now passed its Land Tax measures through both Houses of Parliament, it is now imperative that property owners and their advisers are fully prepared so that they are well equipped to navigate the new regime.

Aggregation to Become Law…

The SA Government has made some major concessions on rates and thresholds including:

  • an immediate reduction from 1 July 2020 in the top marginal rate of land tax from 3.7% to 2.4%;
  • for non-trust taxpayers, the introduction of a new tax bracket at 2.0% between approximately $1.1m and $1.35m and an increase in the highest threshold from approximately $1.1m to $1.35m (increasing to $2m from 1 July 2022);
  • a reduction in the rate of land tax on land valued between approximately $755,000 and $1.1m;
  • land held by multiple owners being initially assessed as one taxpayer, with each owner then being assessed on their fractional interest in the land plus all of their other interests in land on an aggregated basis;
  • the aggregation of land held by related companies;
  • land owned in unit trusts being subject to surcharge rates (unless all unitholders are disclosed to the Commissioner, in which case the unitholders will become deemed landowners); and
  • land owned by discretionary trusts being subject to surcharge rates (unless limited grandfathering rules are applied).

New Concessions

A number of new concessions have also been introduced in an effort to ease any adverse impacts of aggregation, including:

  • a $25m transition fund over three years for eligible individual taxpayers and company groups for relief from any increased land tax payable due to the new aggregation changes;
  • a land tax concession for eligible developers of ”affordable housing”; and
  • specific relief for residential property developers from aggregation where the land being held is solely for the purpose of being developed.

But, as always…

The Devil is in the Detail – Start Planning Now

Property owners and their advisers should now be alive to significant planning issues. For example:

  • For trustees of existing land owning discretionary trusts, thought should be given to whether the grandfathering rules are applied by making beneficiary nominations (and if so, of whom).
  • For trustees of unit trusts, the trustee will need to consult with the unitholders to come to a satisfactory position on whether the unitholders are disclosed to the Commissioner, or whether to incur surcharge rates.
  • For corporate groups, there will be a need for careful analysis in order to determine common control and grouping.
  • All groups will need to consider any available restructuring opportunities as some structures are bound to have less palatable taxation outcomes than others. Of course, potential exposure to the State general anti-avoidance measures should not be overlooked in any restructuring exercise.
  • Each group’s eligibility for the various new concessions should also be considered.

For further information, click here to read our more comprehensive analysis.

Time is Ticking…

With implementation of the reforms just around the corner at 30 June 2020, it is imperative to seek appropriate specialist advice so that action can be taken in advance of this date.

Cowell Clarke is ready to help you navigate the land tax reforms and how they relate to your circumstances.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.

I recommend Cowell Clarke to many people and have found that virtually all have become long standing clients. It is always a pleasure dealing with professionals.

Rick Allert AO, Company Director

Unlike some of the larger interstate firms that I have dealt with, you’re not handed from one lawyer to another, until your matter is delegated to the most junior resource. Partners manage the relationship and retain involvement. Legal knowledge is important, but how it is shared as commercial advice is even more so.

John Hart, Consultant, KPMG

Call us on

Are You Ready For These Changes?

Get In Touch Today.

Back to top