All Topics / Legal & Accounting / land tax NSW double taxation?

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  • Profile photo of Coogee126Coogee126
    Join Date: 2009
    Post Count: 51

    hi guys,

    got a technical questions to ask regarding land tax in NSW.
    1. was the land tax threathhold applied to individual based on their ownership share of the property? say if you jointly own 1 million land value, then each have 500k value , then land tax is free for both . but if you own it 99 Vs 1% , then you end up paying more land tax (but only to the point that the other party reaches threathold , then after both of you reached the threathold, it will make no diffrence what owner percentage ( to a general stand,,i mean the weird calculation about double deduction(see my 2nd question below) maybe make a small amount of difference ))

    2. I was checking the URL below and found it was hard to understanding why they use this
    to avoid the double dedcution? see below , why the decution is allowed here ? I mean to have a deduction is always good, but i just can not get it. it’s not like that the tax has been paid already for the 800k joint properties from Mr.A .. ? so for Mr. A , he already taken 50% of 800k =400k plus 200k of his sole ownership , and paying whatever the portion of his fair share, why the office of revenue still give him that deduction… that calulation of the deduction is bit werid too…. no idea why they use the 400k(his joint holdings) out of 600k ( his total holding) and multiplies the tax rate ? what is the logic behind this ? this seems quite strange, and it didnt make any logic sense to me???? I think $916 is the fair land tax for Mr. A to pay , and i was suprised that Tax revenue office gives backs money? and Mr. A owns together 600k worth of land vaue, only paying $305 land tax ?

    ssessment for joint owners Mr A and Mr B (Property 1)
    Total land tax payable on Property 1 (land value $800,000) $4,116
    Mr A’s 50% interest in Property 1 $400,000
    Mr A’s individual assessment (his share of Property 1 and Property 2)
    Mr A’s 100% ownership of Property 2 $200,000
    Mr A’s 50% interest in Property 1 $400,000
    Total land value of Mr A’s interests in Properties 1 and 2 $600,000
    Land tax payable on total land value of $600,000 before deduction $916*
    *Minus the deduction to prevent double taxation – whichever is the lesser of calculation i) or ii)

    Calculation 1: ($400,000 divided by $800,000) multiply by $4,116 = $2,058.

    Calculation 2: ($400,000 divided by $600,000) multiply by $916 = $610.70.

    Mr A’s allowable deduction is $610.70, so his total land tax payable will be: $916 minus $610.70 = $305.30.

    • This topic was modified 3 years, 6 months ago by Profile photo of Coogee126 Coogee126.
    Profile photo of BennyBenny
    Join Date: 2002
    Post Count: 1,416

    Hi Coogee,

    Wow – that does seem weird. I’ll be interested to read what might be going on there too – I hope one of our gurus can come up with an answer.


    Profile photo of Coogee126Coogee126
    Join Date: 2009
    Post Count: 51

    I rang up OSR today . and I think i found out the answer. correct me if i m wrong though.

    1. the threashold is appied to ‘account’, which is basically can be understand as ‘ ownership structure”. so say if you own 10 properties with your husband, then all the 10 properties total land value will be add up, and you will only get 1 lot of 549k threadthold applied. the rest will be subejct to land tax.

    2. now this is really eye opening, she said on top of the the joint owner if you own some property under your name or jointly own, then you will be access too seperately as an ” account” ( hence the double taxation terms comes from ) . which means , all your 50% holdings which you already paid from point 1, you will be once more asked to those under your name as a seperate ‘account’ , I assume there is also a 549k threadhold applied here to the individual account, then they will use the above stupid method to give you a deduction for double taxation.

    in summary : there is no free lunch i know , from Tax man ? are u fxxxing kidding me? i get that.! but this double counting is just pure exploritation… why the hell am i accesss one more time for the tax I already paid ! now i can feel the pain from karl marx when he wrote ” das kapital” ….

    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213

    Joint owners are considered one owner for land tax purposes in NSW, so they don’t get one threshild each but a combined one.

    Then if they own other property on their own their share of the joint property is taken into account so that they are not double taxed.

    It is all very confusing.

    This is why 2 people owning a few properties in in NSW will pay much less land tax than if they owned jointly.

    Note that QLD is totally different

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide)

    Profile photo of DeanCollinsDeanCollins
    Join Date: 2015
    Post Count: 376

    Awesome response Terry.

    Thanks for confirming.

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