Qld land tax changes a ‘slap in the face’: REIQ

The Queensland government has announced that it will change land tax in a bid to help improve affordability.

When announced the state's budget update last week, Treasurer and Minister for Trade and Investment Cameron Dick explained: “At the moment, interstate property speculators can claim the tax-free threshold and take advantage of lower land tax rates in multiple states.

"That means these investors can amass multi-state portfolios that fall below the land tax threshold in any single state.

"Queenslanders, with their entire landholding in this state, can end up paying more tax than these interstate investors.

"So young families in places like Logan and Ipswich face unfair competition from Sydney-based speculators who are flipping properties around the country at a furious rate."

For example, an individual with taxable landholdings of $1 million in Queensland would pay $4,500 in land tax (or an average rate of 0.45 per cent).

Another individual landholder with $600,000 in taxable land in Queensland and $400,000 in NSW would only pay $500 in land tax in Queensland and no land tax in NSW at current thresholds.

"We’ll close that loophole while ensuring there are no land tax changes for Queenslanders who own land wholly within our state," the Treasurer revealed.

This government said it would now tweak the current land tax arrangements to account for the value of land held interstate when assessing taxpayers’ land tax liability (subject to the passage of appropriate legislative amendments). 

A total national taxable land value will be established for each Queensland landholder, which will continue to exclude exempt land such as principal place of residence.

The national taxable value will determine the appropriate tax rate that will then be applied to the Queensland proportion of the value of the individual or entity’s landholdings.

Under this approach, an individual with $600,000 in taxable land in Queensland and $400,000 in NSW would pay $2,700 in land tax in Queensland, an average rate of 0.45 per cent on their Queensland landholdings, being the same rate as the landholder with all their landholding in Queensland.

Landholders who only own land in Queensland will not be affected by this change. Landholders will continue to be able to access all available exemptions, such as the principal place of residence and primary production exemptions.

Additional land tax will only apply to the taxable Queensland landholdings of individuals who own land in multiple jurisdictions, according to the state government.

‘A slap in the face’

Noting the changes, the Real Estate Institute of Queensland (REIQ) said it was "a slap in the face to the very sector that is propping up the economy" and was "the wrong move at the wrong time".

It noted that the "shock announcement" came without consultation "with relevant property stakeholder groups".

“This treatment of property investors as an endless money pit is outrageous – the government is raking in a huge stamp duty windfall, then relying on private investors to provide the lion’s share of housing supply, and now they’re slapping investors yet again with new taxes,” REIQ chief executive Antonia Mercorella said.

“How can the government possibly justify slugging property investors with tax for land they own that isn’t even within our state borders? It’s utter nonsense that there’s a 'loop hole' to close.

“From a practical standpoint, it’s also baffling to understand how on earth they intend to get this data in order to double-tax investors who are already paying this tax elsewhere.”

Ms Mercorella said that property investors were tired of "being the ATM for the state" and given the flagged second wave of tenancy rental reforms, many could decide to vote with their money.

“There is no other state or territory that takes this approach, and by treating property investors with contempt like this time and time again, investors may very well pull up stumps,” she said.

“All this is doing is deterring people from investing in Queensland and instead, opting to invest where no multi-jurisdictional land tax applies.

“For those not scared off from investing in Queensland, and current investors brave enough to stick around, this tax will make their holding costs more expensive and the logical consequence of that is that rent goes up.

“In the midst of a rental crisis, it’s beggars’ belief that this would be the lever the government pulls. It shows the government lacks the ability to think outside the square and come up with alternative and innovative solutions to find new revenue streams.

“You only have to look at the timing of this bombshell legislative reform to see the government are clearly trying to sneak this in under the radar at a time most people have clocked off for the year.”

[Related: Housing minister blasts Victorian windfall gains tax]