The expected release of land valuations this month serves as a reminder to foreign individuals and companies that they are exposed to Queensland's foreign owner land tax surcharge regime unless they are eligible for an exemption. However, the Queensland Government is still putting the finishing touches to those exemptions.
As Kristy Dorney and Luke Hefferan from our Real Estate team explain, if a foreign owner is not eligible for an exemption, then they need to understand the time critical land valuation objections process to reduce their exposure to the increased land tax liability.
On 1 July 2019, the Queensland Government introduced a 2 percent foreign owner land tax surcharge. The surcharge is calculated on all land owned by a foreign individual or company on the taxable land value over $350,000 (ie (taxable land value – $350,000) x 2 percent).
For example, if an Australian company owns property with a taxable value of $1 million the land tax liability is $12,500, but if a foreign company owns the same land the land tax liability is $25,500.
The Queensland Government is still consulting with stakeholders about a regulatory framework for granting exemptions to approved individuals and companies. The framework is expected to be finalised in the coming weeks, and the Office of State Revenue has suspended the enforcement of some land tax assessment notices until the framework is finalised. We will provide a further update once the final exemption framework is released.
In the meantime, it is important to note land valuations are released this month which are used to calculate land tax assessments for the next financial year. If a foreign individual or company is not eligible for an exemption under the (soon to be) finalised exemption framework, then they will be liable for the full 2 percent surcharge.
Foreign individuals and companies need to understand the process for objecting to a land valuation so that they can best reduce their exposure to the increased land tax liability, if they are not eligible for an exemption. Using the above example, if the foreign company successfully challenges the valuation and reduces the taxable land value to $900,000, then (without any exemption) their land tax liability is lowered to $21,800, which is a saving of $3,700.
The most critical aspect of the valuation objection regime is that any objection must be in the approved form and lodged with the Valuer General no later than 60 days after the date of the valuation notice. There is no process for extending this cut-off date, so once land tax assessments are issued it is already too late for the landowner to raise an objection.
The objection must set out the grounds on which the valuation is disputed and provide supporting evidence. The onus of proof is on the landowner who generally must establish that the Valuer General either acted on an incorrect principle; made a significant error of fact; or the valuation was determined via a methodology which was fundamentally flawed.
After the objection is lodged, the Valuer General must then provide a decision notice confirming whether the valuation should be reassessed at a lower value. If the landowner is unsatisfied with the ruling in the decision notice, they can appeal the ruling to the Land Court.
Lodgement of an appeal must be made no later than 60 days after the date of the Valuer General's decision notice. This cut-off date can be extended if the appeal is lodged within one year of the Valuer General's decision notice and the Land Court believes the landowner has a reasonable explanation for not lodging the appeal within the original 60 day period.
If you receive a land valuation which you believe is inaccurate and you are considering objecting to the valuation, then our Real Estate lawyers can assist you with preparing and lodging the objection in compliance with the regime.