How Is Land Tax Calculated In Australia

If you are a home owner, investor or want to become one, you need to be aware of  property taxes. One of them is land tax.

This is a state or territory tax and each of them have their own laws, but although comparable, they do vary.

Despite some exemptions, the amount of land tax payable depends on the threshold in each state or territory.

What is Land Tax?

Land tax is an annual tax that land owners pay to state and territory governments that is above the land tax threshold.

Land tax is generally payable on the unimproved value of the land that investors own; and applies regardless of whether income is earned from the land.

The unimproved value of the land is the value of the land without taking into account any improvements on the land such as:

  • buildings;
  • landscaping;
  • paths; and
  • fences

Do I have to pay Land Tax?

You may have to pay land tax if you own, or jointly own:

  • vacant land, including rural land;
  • the land where a house, residential unit or flat has been built;
  • a holiday home;
  • an investment property;
  • company title units;
  • residential, commercial or industrial units, including car spaces;
  • commercial properties, including factories, shops and warehouses; and
  • land leased from the state or local government

How is calculated?

Land tax is calculated on the “combined” value of all your taxable land above the land tax threshold, not on each individual property.

If you own three properties and the unimproved land value of each property is $350,000, 400,000 and $550,000, you will be liable to pay land tax on the combined amount of $1,300,000.

If the combined value of your land does not exceed the threshold, there is no land tax payable.

Find the easy-to-use land tax calculator in your state or territory:

Land Tax Thresholds

The amount of land tax payable depends on:

  • whether it’s an individual paying land tax or whether its a company or trust; and  
  • the land tax threshold of each state or territory

For Individuals

  1. Queensland: payable on 30 June each year
Taxable Value Land Tax Rate
less than $599,999$0
$600,000–$999,999$500 + 1 cent for each $1 more than $600,000
$1,000,000–$2,999,999$4,500 + 1.65 cents for each $1 more than $1,000,000
$3,000,000–$4,999,999$38,500 + 1.25 cents for each $1 more than $3,000,000
$5,000,000–$9,999,999$72,500 + 1.75 cents for each $1 more than $5,000,000
$10,000,000 or more$150,000 + 2.25 cents for each $1 more than $10,000,000

The thresholds for land values change each year:

General Land Tax Threshold Premium Land Tax Threshold
$100 + 1.6% of the land value above the threshold, up to the premium threshold$60,164 + 2% of land value above the threshold

Thresholds:

Tax YearGeneral Land Tax ThresholdPremium Land Tax Threshold 
2021$755,000$4,616,000
2020$734,000$4,488,000
2019$692,000$4,231,000
  • Northern Territory

Land Tax doesn’t apply to Northern Territory.

Fixed ChargeValuation Charge
$1,326A marginal rate charged on the average unimproved value of the land: 2019-20 and before: averaged over the last 3 years; 2020-21: averaged over the previous 4 years; and 2021-22 and after: averaged over the previous 5 years.
Average Unimproved Value Percentage Marginal Rate
up to $150,0000.52%
from $150,000 to $275,000$780 + 0.62% of the part that is more than $150,000
from $275,001 to $2,000,000$1,555 + 1.10% of the part that is more than $275,000
$2,000,000 and higher $20,530 + 1.12% of the part that is more than $2,000,000
Taxable Value Land Tax Rate
less than $24,999$0
$25,000 to $349,999$50 + 0.55% of value above $25 000
$350,000 or more $1,837.50 + 1.5% of value above $350 000
  • Victoria: payable on 31 December each year
Taxable Value Land Tax Rate
less than $250,000$0
$250,000 or more but less than $600,000$275+ 0.2% of the amount more than $600,000
$600,000 or more but less than $1,000,000$975+ 0.5% of the amount more than $600,000
$1,000,000 or more but less than $1,800,000$2,975+ 0.8% of the amount more than $1,000,000
$1,800,000 or more but less than $3,000,000$9,375+ 1.3% of the amount more than $1,800,000
$3,000,000 or more$24,975+ 2.25% of the amount more than $3,000,000
Taxable Value Land Tax Rate
less than $300,000$0
$300,001 to $420,000$300
$420,000 to $1,000,000$300 + 0.25 cent for each $1 more than $420,000
$1,000,000 to $1,800,000$1,750 + 0.90 cent for each $1 more than $1,000,000
$1,800,000 to $5,000,000$8,950 + 1.80 cents for each $1 more than $1,800,000
$5,000,000 to $11,000,000$66,550 + 2 cents for each $1 more than $5,000,000
$11,000,000 or more$186,550 + 2.67 cents for each $1 more than $11,000,000
Taxable Value Land Tax Rate
less than $450,000$0
$450,000 or more but less than $723,000$0.50 for every $100 or part of $100 above $450,000
$723,000 or more but less than $1,052,000$1,365 + $1.25 for every $100 or part of $100 above $723,000
$1,052,000 or more but less than $1,350,000$5,477.50 + $2.00 for every $100 or part of $100 above $1,052,000
$1,350,000 or more$11,437.50 plus $2.40 for every $100 or part of $100 above $1,350,000

Companies and Organisations:

Generally, if your business owns property, then it’s likely you’ll need to pay land tax on it, similarly to an individual.

However, some states and territories have certain specific requirements that others don’t. 

For example, in QLD, a company is assessed in the same way as an individual, but with different thresholds and rates.

So, make sure that you visit the relevant state or territory’s government website for the rates applicable to companies.

Trusts

A trust is an arrangement where a trustee manages or holds property for the benefit of one or more individuals or organisations – known as a beneficiary.

When calculating your land tax liability, you must consider the value of your interest in the account.

A trust may be liable for land tax and/or surcharge land tax. Make sure you visit the relevant state or territory’s government website for the rates applicable to trusts. 

You may be able to reduce the amount you pay by claiming an exemption, depending on the type of trust.

If you’re thinking of purchasing a property through your trust, it’s vital that you review the land tax rules of the state that you’re purchasing in. 

For example, in NSW, family trusts don’t have the land tax free threshold.

In QLD, the trustee is liable for land tax if the total taxable value of the freehold land held for that trust is $350,000 or more, however, an exemption can be claimed if all the resident beneficiaries of the trust or estate use that land as their home.

Land Tax Exemptions

Depending on the land ownership and use, you may be eligible for a land tax exemption.

You don’t usually have to pay land tax on your main home (permanent residence). However, you may be eligible for more than one exemption depending on the state or territory. 

Disclaimer: The information contained in this article is general in nature and should not be taken as personal, professional or taxation advice. You ought to make your own inquiries and seek independent, professional advice before taking action or relying on any information in this article. As Capital Gains Tax legislation is subject to change, we cannot guarantee the timeliness of the information provided.

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