SA’s New Rule to Crack Land Tax “Loophole” Meets with Severe Opposition

land tax

The latest budget drawn in South Australia, pointed towards some changes to land tax in the forthcoming days. Ever since the revelation, it has become a controversial issue. There is an existent back and forth between the government and powerful lobby groups.

Amidst the chaos created by the government, announcing modifications to the land tax system in South Australia, there has been a serious resistance growing against the same. These new land tax measures, seem beneficial at the outset but some proposed provisions could be detrimental to property owners, especially those holding multiple properties or one property with multiple owners.

The new budget seemingly empathetic will bring down land tax rates and increase the minimum threshold. That may be cheered by many. Tax is applicable for owners paying more than $391,000. As the value of the property goes up the percentage increases too, 3.7 per cent for properties worth more than $1.3 million. The budget declares that July 2020 will see a cut, with threshold increased to $450,000. This is projected to reduce the land tax revenue by $50 million per year. So far, it’s all good news. But the problem begins when the budget proposes to investigate an apparent loophole in the land tax system, to conversely ensure revenue chirps in from another side.

The Government has proposed a crackdown on land tax aggregation. This system allows owners to split their properties to reduce their land tax rates, since land tax increases in line with property values. Identified as a single property owner instead of spreading ownership across multiple businesses and trusts could lead to exorbitant tax payments. A crackdown of this will bring in $40 million at least every year.

The state’s Property Council, has responded negatively to this inclusion stating that the government will benefit far more than they are revealing in terms of surmounted revenue and this will also increase the burden on property owners substantially. This backlash has permeated in open discussions and may result in some reconsiderations by the government.