When advising taxpayers, emphasis is often placed on income tax and capital gains tax impacts of transactions, with little thought given to the land tax ramifications of certain decisions.  However, with an increasing government focus on raising revenue through land tax, advisers and taxpayers should consider whether they are properly claiming land tax exemptions (or such exemptions remain available given any change in circumstances).

For example, when individuals are considering relocating overseas (whether for a fixed period, or indefinitely), consideration is often given to whether those individuals will cease to be resident for Australian income tax purposes.   Individuals who no longer reside in Australia may be considered an ‘absentee’ for land tax purposes.  The potential land tax ramifications of this change in residency status may mean that the individual is considered mean that:

  • the benefit of the home exemption for land (formerly) owned and used as a main residence is lost, and
  • the taxpayer will potentially be subject to lower tax free thresholds for land tax (e.g. in Queensland most individual non-residents will be subject to a $350,000 tax free threshold compared to $600,000 for resident individuals).

As these concepts are different in each jurisdiction (with the result that the outcome may also be different, depending on the State in which property is located), clients should consider obtaining professional advice if they are concerned about their land tax exposure.