An Example of the Unfairness of QLD Land Tax to Non-Resident Citizens
There are recent amendments to the laws relating to land tax on properties located in QLD and they can oppressively burden Australian citizens living overseas. Many Aussies have invested in property in QLD and then gone and lived overseas for lifestyle and or living costs hoping to enjoy their retirement by living in their rental incomes. But they are now being taxed so high that many will either need to come back to Australia or sell their properties.
QLD is the only state that taxes Australian Citizens like this.
The issue is that there are different land tax rates for ‘absentees’. Australian citizens who are outside of Australian for more than 6 months canfall into the definition on ‘absentee’. The absentee doesn’t get the $600,000 threshold like non-absentees – their threshold is just $350,000. Plus the rate they pay is higher too. On land worth $1mil the absented rate is 1.7%but the non-absentee individual rate is just 1%.
Now there is also an ‘absentee surcharge’ that goes on top of the absentee rate. For land valued at more than $350,000 the rate is 1.5%.
This means on land worth $1mil the land tax rate would be 3.2% – every year.
Here is an example of how harsh in can be:
John is retired and has a property worth $800,000 with a land value of $500,000 in QLD.
He is getting $500 pw rent, or $400pw after costs. It is fully paid off and this would be John’s only source of income when he quits his job.
John goes and lives in Myanmar where it is cheap to live as he can live like a king on $400 per week.
Poor John didn’t factor in land tax.
Before leaving Australia there was no land tax payable.
Now, since he is living overseas he will be classed as an ‘absentee’ owner as he is not ordinarily residing in Australian.
Section 31 Land Tax Act 2010 QLD.
Because John is an ‘absentee’ Schedule 3 of the Land Tax Act applies to determine the rate of land tax John will pay.
Part 1 is the general rate and it is charged at $1,450 plus 1.7 cents for each $1 in value more than $350,000.
This equates to $4,000
But it gets worse, because Schedule 3 has a Part 2 which imposes a Surcharge Rate.
Therefore there is an additional 1.5 cents payable for each $1 in value more than $349,999.
In John’s situation this will be $2,250.
John’s total land tax went from $0 to $6,250 per year.
Poor John is now living on $280 per week. His income has been cut in half almost.
And this is before we even consider the Commonwealth tax issues of him living overseas and possibly being a non-resident for income tax. This could leave John was extra income tax of about $4,728 per year.
This would mean his annual post tax income has gone from around $20,000 to $9,821 or $188 per week.
Next year there could be a jump in values which may result in even more land tax (but possibly no increase in rents).