Queensland's "generous" tax system will soon be reformed to level the playing field between local and interstate investors.
As noted in the 2021-2022 Budget Update – Mid-Year Financial and Economic Review, the Queensland government plans to close the 'loophole' in the property tax system of the Land State, which allows interstate investors, especially those with investments in other states, to take less responsibility.
As part of the "fairer" property tax system envisioned in the budget update, the tax provisions will be amended to reflect the total value of land held between states at the time of taxation. property tax payable assessment.
Here is an excerpt from the budget update:
A total national taxable land value will be established for each landowner in Queensland, who will continue to exclude exempt land such as primary place of residence.
The national assessed value will determine the appropriate tax rate which will then be applied to the Queensland proportion of the value of the individual's or entity's land properties.
Under the current system, a local investor owning a million dollar property would pay $ 4,500 in property tax, which is significantly higher than the $ 500 fee charged for an investor with a $ 600,000 property in Queensland and a $ 400,000 property in New South Wales.
With the new approach, the interstate investor will now have to pay a property tax of $ 2,700 in Queensland.
The state government has assured that the change will not affect investors who only own land in Queensland.
Additionally, the state has stated that investors will still be able to access all available exemptions, even with an expected policy that legislates reforms.
Tax reform a slap in the face for the sector
Queensland Real Estate Institute (REIQ) CEO Antonia Mercorella said the announcement of the property tax changes is a "slap in the face" for the sector that supports the local economy.
"This treatment of real estate investors as a never-ending money pit is scandalous – government rakes in huge stamp duty windfall, then relies on private investors to provide the lion's share of housing supply , and now they're slapping investors again. again with new taxes, ”Ms. Mercorella said.
The state's mid-year budget so far showed $ 5.38 billion in stamp duty revenue for the current fiscal year, with a final expected figure of 39; approximately $ 16.53 billion to $ 19.93 billion.
Ms Mercorella said the government failed to consult relevant stakeholder groups on this new property tax regime, which was not the right choice at the wrong time. .
"From a practical standpoint, it's also confusing how the hell they intend to get this data in order to double the tax on investors who already pay this tax elsewhere, ”she said.
"No other state or territory takes this approach, and by treating real estate investors with contempt like this over and over again, investors may very well be pulling stumps." "
These reforms, according to Mr. Mercorella, would scare off potential investors and significantly increase the costs of holding existing investors, which would then lead to higher rents.
"This shows that the government does not have the capacity to think outside the box and come up with alternative and innovative solutions to find new sources of revenue," she said.
"One need only look at the timeline of this explosive law reform to see that the government is clearly trying to get this under the radar at a time that most people have timed for the year." "
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Photo by @frankbusch on Unsplash.
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