Understanding Land Tax in Australia: Exemptions, Thresholds, and Traps

What is Land Tax?

Land tax is a state-based tax charged on the value of land your land that exceeds a specific threshold. It’s usually paid once a year and varies within each state and territory of Australia as they each have their own thresholds and rules. The tax paid is based on the land's value without any buildings or improvements. In NSW, this value is determined at 1 July each year by the Valuer General.

Back to Contents

Land Tax Exemptions

Luckily, there are some land tax exemptions that can keep your wallet happy! You usually don’t have to pay land tax on:

• Your home i.e. principal place of residence
• Farms
• Any land you own that’s worth less than the land tax threshold (depending on your ownership structure)

Back to Contents

Ownership Structures and Land Tax Applications

Land can be owned in a variety of structures and land tax is applied differently depending on the legal owner of the land.

Individually, or Jointly as Tenants in Common

One perk of owning land personally is that you will be entitled to benefit from the land tax threshold and therefore only pay land tax on the value of the land over that threshold - currently $1,075,000 in NSW.

If you’re the sole owner of a parcel of land, you will typically receive a land tax assessment from the state government advising the value of the land you own, and the amount of land tax payable.

If you own land jointly with someone else, you will receive a joint land tax assessment i.e. the notional “partnership” of joint landowners is assessed as one landowner. Each joint owner, called a 'secondary taxpayer', is then assessed individually for their respective interest in the land, along with any other land they may own personally. 

The secondary land tax assessments issued to each joint owner will include a credit for their share of the land tax paid by the notional “partnership” of joint landowners, to avoid double taxation.

Companies

Land Tax within a company is generally treated in the same manner of which it is treated for an individual.

Trust

All types of trusts will be assessed for land tax, but not all trusts qualify for a land tax threshold.

A discretionary trust (most family trusts are discretionary trusts) does not qualify for the land tax threshold and is assessed on the entire value of the land owned.

A fixed trust (unit trusts can often be fixed trusts) qualifies for the land tax threshold. To be classified as a fixed trust, the trust needs to meet specific criteria, and the wording of the trust deed becomes very important. This is discussed further below.

After a unit trust trust has paid its land tax, Revenue NSW will issue additional assessments to each unit holder separately. Each unit holder then receives a credit for any land tax already paid by the trust, preventing double taxation.

Back to Contents

NSW Land Tax Traps

Foreign persons

If you are not an Australian citizen or have not lived in Australia for more than 200 days in the 12 months leading up to the 31 December taxing date, you will be deemed a ‘foreign person’. A foreign person can include any of the below entities:

• An individual
• A company
• A trustee of a trust
• A beneficiary of a land tax fixed trust

In NSW, foreign landowners are required to pay an additional land tax surcharge of 4% on top of other land tax obligations. This 4% additional levy is payable on the taxable value of all residential land that is owned as at midnight December 31 each year.

Foreign persons and discretionary trusts

Revenue NSW automatically assumes that a discretionary trust is a foreign entity if it holds residential land, unless the trust deed includes a specific clause that permanently excludes foreign persons as beneficiaries. If your discretionary trust owns property, you may want to consider having the trust deed reviewed to ensure that it includes the clause excluding foreign persons.

Does a Unit Trust meet the definition of Fixed Trust?

As noted earlier, a fixed trust can qualify for a land tax threshold. This includes some unit trusts and bare trusts. To be considered a fixed trust under Revenue NSW and the Land Tax Management Act, the trust deed must meet these criteria:

• Unit holders are presently entitled to all the income of the trust after payment of the proper expenses incurred by the trustee in authorised administration of the trust
• Unit holders are presently entitled to the capital of the trust and may require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust
• the entitlements can’t be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the trust deed
• for unit trusts, only one class of units can be issued, and the proportion of trust capital a unit holder is entitled to on winding up or surrender of units must be fixed and must be the same as the proportion of income of the trust to which the unit holder is entitled.

Back to Contents

Current Land Tax Thresholds & Calculations

Land Tax rules can change year on year, some states tend to update their Land Tax thresholds each year so it’s important to keep on top of the changes. Below is a summary of the 2024 Land Tax thresholds for each state as well as some links to each state’s website with some additional information if you wanted to do some extra reading.

New South Wales

Assessment date – Midnight on 31 December each year

For additional information around NSW Land Tax refer to the Revenue NSW website.

Victoria

Assessment date – Midnight on 31 December each year

For additional information around Victorian Land Tax refer to the State Revenue Office website.

Queensland

Assessment date – Midnight on 30 June each year

For additional information around Queensland Land Tax refer to the Queensland Government website.

South Australia

Assessment date – Midnight on 30 June each year

For additional information around South Australian Land Tax refer to the Revenue South Australia website.

Western Australia

Assessment date – Midnight on 30 June each year

For more information around Western Australian Land Tax refer to the Western Australian Government website.

Tasmania

Assessment date – Midnight on 30 June each year

For more information around Tasmanian Land Tax refer to the State Revenue Office of Tasmania website.

Northern Territory

Currently the Northern Territory Government does not charge land tax for land owners.

ACT

Notice of assessment dates - Midnight on 1 July, 1 October, 1 January and 1 April each year

For more information around ACT Land Tax refer to the ACT Revenue Office website.

Back to Contents

What Do I Need to Do if I Own Land?

Land Tax in Australia is a self-assessed tax, which means if you own land, it’s up to you to determine whether you need to register. 

It’s like being your own tax detective, but without the cool hat! Just remember, the State Revenue Offices and the ATO are keeping an eye on land title records to make sure you’re not playing hide and seek with your obligations.

In NSW, once you register, you’ll get your Land Tax Assessment in January. Think of it as your yearly reminder of what you own and how much tax you owe. If you hit the land tax threshold for the first time by December 31, you have until March 31 to register.

If anything on your assessment looks off, you’ve got until the first payment date (usually the end of February) to let the State’s Land Tax Office know. And if you disagree with the land values? You can file an objection within 60 days of receiving your assessment.

Need some help navigating your Land Tax obligations? BLG Business Advisers has got your back! We’re based in Wollongong but can help clients all over Australia. So, don’t hesitate to reach out to one of our team members—after all, we’re here to make taxes a little less taxing!

Wishing you every success!

Back to Contents

*Please note that the above information is general advice only. We recommend you seek advice from a specialist relevant to your personal situation. This information is relevant at the time of publishing and is subject to change*