The Queensland state budget has recently been released and provided a win for Australian Expats who own property in Queensland. From 1 July 2019 on wards, Queensland will catch up with the rest of Australia and no longer classify Australian Citizens who are currently non-residents, as absentees for land tax purposes.
It is important to highlight that land tax is only payable on the value of the freehold land and not the value of the property and land together. The “taxable land value” is determined by the Queensland government and is quite different than the fair market value that your real estate agent might attribute to your property.
The Valuer-General, provides land valuations for Queensland, and usually issues these in March of each year. Additionally, the Valuer-General has the discretion to not make a new valuation and to use the existing value from the previous year. To find your current land value check out the following link: https://www.dnrme.qld.gov.au/qld/environment/land/title/valuation/search
Current Absentee Rules
Under current land tax rules an Australian Citizen is declared to be an absentee for land tax purposes if they are either:
- away from Australia at 30 June; or
- have been away from Australia for more than 6 months in total during the financial year before 30 June
This absentee status comes with a lower tax free threshold than the individual rates and a 1.5% absentee surcharge payable on any taxable land value over $349,999. The current absentee land tax rates are as follows:
Company, Trustee and Absentee Rates
Example under current rules:
If you were an Australian Citizen who was currently an Australian non-resident living overseas, you would be deemed to be an absentee for land tax. The following example is of an absentee who owns a property in Queensland that had a total land value of $500,000:
- Total taxable value of $500,000
- Tax band is $350,000–$2,249,999
- Tax calculation = $1,450 + (1.7 cents × $150,000 excess)
- = $4,000
- Add 1.5% absentee surcharge = $2,250
- Total tax payable = $6,250
New Absentee Rules
Under the new land tax rules, from the 1st of July 2019 onward an Australian Citizen who is not ordinarily residing in Australia will no longer be assessed as an absentee for land tax purposes.
This means that Australian Citizens who previously were under absentee land tax rates will now enjoy the more favourable individual rates and will no longer have to pay the absentee surcharge. The individual land tax rates are as follows:
It is important to note that the above rates only apply to properties held in your individual name. Owning properties through a trust or company will cause you to be taxed under the company, trust and absentee rates disclosed prior.
Example under proposed rules:
If you are an Australian Citizen who is currently an Australian non-resident living overseas, you would no longer be deemed to be an absentee for land tax from 1 July 2019 on wards.
The following example is of an absentee who owns a property in Queensland that had a total land value of $500,000:
- Total taxable value of $500,000
- Tax band is $0–$599,999.
- Tax calculation = $0
- Total tax payable = $0
To reach a land tax payable under individual rates that is comparable to the current absentee rates, an individual would be required to have a land value of $1,105,000. See below:
- Total taxable value of $1,105,000
- Tax band is $1,000,000–$2,999,999
- Tax calculation = $4,500 + (1.65 cents × $105,000 excess)
- = $6,233
- Total tax payable = $6,233
From the previous example it is easy to see how these changes will positively affect Australian expats who own a rental property in Queensland. Under the new rules from 1 July 2019, Australian Citizens who are currently non-residents will be assessed under the advantageous individual rates and no longer under the absentee rates.
This will lead to a significantly lower amount of land tax paid. Additionally, Australian expats who own a property in Queensland will no longer have to pay the absentee surcharge while overseas.
As you can see the recent budget changes are good news for expats who own Queensland property and it will save them thousands of dollars per year on taxation from their Queensland rental properties.