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REIQ calls for repeal of ‘illogical’ Qld land tax regime

REIQ calls for repeal of ‘illogical’ Qld land tax regime
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Calls are building for Queensland to repeal incoming land tax laws that would see property investors taxed based on their whole portfolio, regardless of location.

Property and investor groups have begun calling on the Queensland state government to halt its incoming property tax changes, which would change the way interstate investors are taxed.

From 30 June 2023, those who own property in Queensland and in another state or territory will need to declare their interstate land holdings, including land description, value and percentage of ownership.

Property investors who own land in Queensland and interstate will see their land tax calculations based on the total of their taxable land located in Queensland and the statutory value of their interstate land (determined by valuation legislation in that state or territory). 

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Previously, only land held in Queensland was included in the calculations.

While the new land tax was first announced in December 2021, the bill making the changes — the Revenue Legislation Amendment Bill 2022 — only received assent on 30 June 2022. The provisions will not commence until 1 January 2023 and will apply for the 2023–24 land tax year onwards.

However, several groups have flagged that the change will cost investors thousands of dollars. 

For example, if a person were to own $300,000 worth of Queensland property, they would be exempt from tax prior to 1 July. However, under the updated laws, if the same individual were to own $1 million worth of property in another city, they would be considered to own $1.3 million worth of taxable property — rather than the Queensland portion of $300,000, and subsequently taxed as such. 

The Real Estate Institute of Queensland said on Monday (5 September) that Queensland’s commercial and residential property investors were in for a “rude awakening” when the change comes into effect next year. 

Chief executive Antonia Mercorella said the bill was “as unique as it is illogical,” slamming the government for allegedly passing the bill hastily and without detail or proper consultation with the proper qualified stakeholders.

“It is irreconcilable that the Treasury expects legitimately raise tax on the basis of value of property held outside of Queensland, for the purpose of funding infrastructure within Queensland,” Ms Mercorella said, adding that the tax manages to hurt landholders, renters, companies, and small businesses altogether.

“I would have thought that the Queensland economy would benefit from attracting businesses to operate in our state, bringing skills, innovation, and jobs for our growing population.” 

Talking about the consequences of the legislative changes, she outlined how commercial rents will rise “through the roof,” while also sending a message to businesses to get “the monkey off their back” by packing up shop and taking their operations elsewhere.

Given the state is presently in the grips of the tightest rental market in its history — with 36 per cent of Queensland residents renters — Ms Mercorella believes now isn’t the time to risk “rocking the boat of private residential rental stock” given the majority of housing stock is supplied by private investors. 

“Instead of a carrot, the government has yet again used the stick, in yet another desperate money grab from the property sector,” she said. 

“By the government’s own example this land tax change will see a 332 per cent increase in land tax. This is likely to have a detrimental impact on the appeal of investing in Queensland, particularly when you consider the cumulative effect of all the legislative reform investors are being hit with.” 

Ms Mercorella stressed that there were “plenty of reasons to invest in the Sunshine State,” but she conceded that “with this land tax regime the Treasury has not only knocked the confidence out of Queensland property, it’s delivered a king hit.”

“For these reasons, the REIQ will continue to advocate against these land tax changes and is calling on the Treasurer to repeal this bombshell legislative reform before it comes into effect in 2023,” she concluded.

“The REIQ is willing to work with the Queensland government on more innovative solutions to remove the burden and inefficiencies of the current taxation system.”

[Related: Qld building company goes into liquidation]

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