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Tax professionals unite in condemning Queensland’s “misguided revenue grab”.
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Accounting bodies welcome Palaszczuk backflip on land tax
03 October 2022
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11 minute read
Professional tax bodies united in condemning Queensland’s expanded land tax regime after the state Premier bowed to pressure and abandoned the changes late last week.
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They said it exposed a need for land tax reform along national lines but Queensland’s decision to go it alone would have “consequences for confidence” and should never have gone that far.
Queensland Premier Annastacia Palaszczuk ditched the controversial land tax after weeks of negative publicity and a refusal by NSW Premier Dominic Perrottet to co-operate.
The changes, which were due to start next year, would calculate an owner’s liability for land tax based on the total value of their Australia-wide holdings that are not exempt, not just those in Queensland.
It was expected to affect approximately 10,000 investors and recoup the Queensland government almost $20 million a year from 2023–24.
CPA Australia senior manager for tax policy Elinor Kasapidis was pleased the Queensland government had made the right decision but “disappointed it had to get to this point”.
“It’s important for governments to ensure businesses and investors have certainty,” she said. “While we are glad the land tax has been scrapped, this will have consequences for confidence.
“This is why rigorous consultation is important. Major changes should always go through consultation and co-design. Misguided ideas should not be dumped onto the public. We strongly encourage all governments to work closely with policy experts to identify opportunities for improvement.”
She said the issue had highlighted the need for reform in the area.
“It’s a good time to take a closer look at the taxes investors are charged,” Ms Kasapidis said.
“Land tax thresholds haven’t been adjusted in Queensland since 2008. Bracket creep leads to unfair outcomes for investors. We want to see bracket creep addressed. Land tax thresholds should be adjusted annually.”
CA ANZ group executive for advocacy Simon Grant said the Queensland land tax was a cautionary tale for politicians rushing through revenue reform.
“To improve the efficiency of taxation in Australia we need to move towards higher taxation of land and consumption, but that is fraught with political difficulties as the Queensland government has just found out,” he said.
“This backflip demonstrates the need for better integration and co-ordination between Australian jurisdictions.
“With different states having different exemptions, thresholds and valuation timings the Queensland proposal was going to be a compliance nightmare for taxpayers.”
The absence of consultation left property owners “without enough time to allow landowners to understand, let alone manage, the impact on them. But there was a lesson for them, too.
“The golden rule for property owners is do your homework, crunch the numbers, and figure out what works best for you,” he said.
“As the Queensland experience has shown, property decisions are not ones that can be ‘set and forget’ — continual monitoring is needed.”
The National Tax & Accountants Association said its members were pleased to hear of the last-minute change of heart by the Queensland Premier, with many raising concerns over one example on the Queensland Treasury website.
It showed that one Queensland landholder (with property in both Queensland and Victoria) under the new regime would incur a land tax increase from $1,950 to $8,422.37 for the 2024 financial year.
IPA general manager of technical policy Tony Greco said it was “no surprise that the Queensland revenue grab aggregation rule change will be dumped” and the state had nowhere to go once other states baulked at the idea.
“It was a controversial way to extract more money from property investors and this was known from the start,” he said.
“Other States and territories not co-operating with providing land holding information put the onus back on the landholder to voluntarily provide this information was possibly the last straw.
“Maybe they thought other states would support the aggregation rule to bolster their finances, but NSW was not going to touch this with a barge pole.
“Not having access to land holdings and relying on voluntary disclosures would have created an administrative headache.”
From a practical perspective, the lack of consistency between state land tax rules meant it was always going to be an administrative nightmare.
“Unlike payroll tax where there has been some harmonisation of the rules, the same cannot be said for land tax particularly around exemptions and concessions. Also, not all jurisdictions impose land tax. The Northern Territory does not impose land tax for example,” he said.
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