Forgotten land Tax

I have met some people who have forgotten to claim land tax and/or thought they were exempt but were later caught out. Land tax can only be claimed in the year in which it relates to – not the year in which it was paid. ATO ID 2010/192 (now withdrawn, but law still current).

In some cases it will be too late to amend tax returns and these land tax costs will not be able to be claimed for prior years.

I had a call from an old friend who has a trust which owns 3 rental properties in NSW and has held them for about 10 years – yet they have never paid land tax and didn’t really know about it until I asked him how much he was paying.

The problem is when the property is sold the land tax clearance certificate will not be clear and he will have a large sum payable before settlement. Yet they will probably not be able to claim more than 2 years. As the trustee is liable this will also affect the distributions the trust has made and it will be messy to fix so there would be additional tax agent fees.

So if you haven’t done so already register for land tax and pay it as it is incurred.

Written by Terry Waugh, lawyer at Structuring Lawyers, www.structuringlawyers.com.au

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