Land tax

Land tax

Land tax is a tax levied on the owners of land in New South Wales (NSW) as at midnight on the 31 December of each year. Land tax applies to land regardless of whether income is earned from the land.

Liability

Who needs to pay?

You may need to pay land tax if you own, or jointly own, any property in NSW that is not your principal place of residence (your home) or other exempt land as at midnight on 31 December and the total taxable value of your land is greater than the land tax threshold.

For land tax, an owner is defined as any of the following:

  • sole owner
  • joint owners
  • a company
  • owners of company title units
  • trustee of any trust
  • beneficiary of a trust which is not a special trust
  • society or organisation whose land is not exempt
  • unit holders with interest in a unit trust which is entitled to the land tax threshold
  • trustees of superannuation funds
  • certain lessees of crown or local council land.

What types of property are liable?

You may have to pay land tax on:

  • vacant land, including vacant rural land
  • land where a house, residential unit or flat has been built
  • a holiday home
  • an investment property or properties
  • company title units
  • residential, commercial or industrial units, including car spaces
  • commercial properties, including factories, shops and warehouses
  • land leased from state or local government.

Rates and thresholds

What are the current rates and thresholds?

The current rates and thresholds are listed below:

Tax year Threshold Rate
2016 $482,000 $100 plus 1.6% up to the premium threshold.
$2,947,000 and over (Premium threshold) $39,540 for the first $2,947,000 then 2% over that.

View previous rates and thresholds.

Register for land tax

Do I need to register for land tax?

If the total value of your taxable land is greater than the land tax threshold, you will need to register for land tax.

How do I register for land tax?

To register for land tax, you can:

  • complete your registration online using Land tax online
  • call us on 1300 139 816.

If you have previously registered for land tax, you do not need to complete another registration.

You must register by the 31 March in the taxing year. If you fail to lodge a return, we may apply interest and penalties to your assessment based on the Taxation Administration Act 1996.

Once registered, how do I change my details?

If your details have changed, you can update them:

How will I know if I have to pay?

Once you register, we will send a notice of assessment based on the information you have provided. This will show any land tax payable on the land you own. You will then be issued with a yearly assessment if liable.

Your land valuation

How is the value of my land determined?

We use land values supplied by the Valuer General, who values your land as at the 1 July. We use the valuation for the year before the tax year, for example, the 2015 value is used for the 2016 tax year.

To determine the value of your land, we add the land value for the current tax year and the land values for the previous two tax years, then calculate the average.

Strata unit valuations

For strata units, the land value for each individual strata lot is calculated on a proportional basis, using the unit entitlement for each lot and the aggregate for the strata scheme.

What if I disagree with the valuation of my land?

If you disagree with the valuation of your land, you may object to the land valuation used in your land tax assessment by writing to the Land and Property Information within 60 days of receiving your notice of assessment.

For more information, visit the Land and Property Information website.

Note: if you are objecting to your land valuation, you will still need to pay your land tax or you may be charged interest on any outstanding liability.

Calculating your land tax

How is land tax calculated?

Land tax is calculated on the total value of all your taxable land above the land tax threshold ($482,000).

The amount of tax paid is $100 and 1.6 per cent of the land value between the threshold and the premium rate threshold ($2,947,000) and 2 per cent thereafter.

Note: where land is owned in partnership, regardless of the number of partners, the threshold is still $482,000.

An individual's interest in a partnership may also be assessable if that owner holds other land individually or with other partnerships.

For more information on how land tax is calculated, see sample land tax calculations.

Companies

A company is assessed in the same way as a sole owner unless it is related to another company

Related companies

Companies are related if:

  • a company controls the composition of the board of directors of the other company
  • one or more persons own more than half the voting shares in two or more companies
  • a person(s) and a company, in which they are a shareholder together, have a controlling interest shareholding in another company.

When assessing related companies the concessional company receives the benefit of the threshold and each other company (non-concessional) is assessed without the threshold.

Where the concessional or joint concessional companies’ land value exceeds the premium rate threshold, the land value of each non-concessional company is assessed at 2 per cent of the taxable value.

Where the land value does not exceed the premium rate threshold, but exceeds the general threshold, the land value of each non-concessional company is assessed at 1.6 per cent of the taxable value.

For more information on related companies, see Revenue Ruling - LT 003v2 - Related Companies Section 29 of the Land Tax Management Act 1956.

Trusts

For land tax purposes, trusts can be divided into six categories:

  • special trusts
  • fixed trusts
  • superannuation trusts
  • trusts created by a will
  • concessional trusts
  • charitable trusts

A special trust is a trust where the trustee is the only person who meets the definition of ‘owner’ for land tax purposes, and the beneficiaries are not considered to be owners. If a trust does not meet one of the following trust definitions, it is a special trust. Examples of special trusts include most family trusts, discretionary trusts, some unit trusts and some trusts created by a will.

The land tax threshold does not apply to special trusts, which are taxed at a flat rate of 1.6 per cent for amounts up to the premium land tax threshold and then at 2 per cent thereafter.

The following trusts receive the land tax threshold:

A fixed trust is a trust where the beneficiaries are considered to be owners of the land at the taxing date of midnight 31 December. This is because they are presently entitled to the income and capital of the trust and these entitlements cannot be varied by the trustee in any way. Fixed trusts include some unit trusts and bare trusts.

A superannuation trust is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust under Sections 42, 43 and 44 respectively of the Commonwealth Superannuation Industry (Supervision) Act 1993.

A trust created by a will is entitled to the threshold. However, if the trust is a testamentary discretionary trust, it will become a special trust 24 months after the date of death of the testator, or such further period as approved by the Chief Commissioner.

A family unit trust is a trust that held land at midnight on 31 December 2005 with a taxable value of $1,000,000 or less, the unit holders have fixed entitlement to income or capital, and 95 per cent or more of the units were family-owned. Certain criteria must be met to continue to qualify as a family unit trust.

A concessional trust is a trust where the land in the trust is held for the benefit of a person who is:

A special disability trust within the meaning of the Commonwealth Social Security Act 1991 is also taken to be a concessional trust.

A charitable trust, includes trusts created for the relief of poverty, advancement of education or religion or for the benefit of the community.

Note: A beneficiary or unit holder in a fixed trust, a trust created by a will (other than a special trust), a family unit trust or a concessional trust is an owner of their interest in the trust and would need to take the value of their interest into account when a liability to land tax is being considered.

A unit trust may be a fixed trust, a special trust or a family unit trust. To be a fixed trust, certain criteria apply. If these criteria do not apply, the trustee may restructure the trust deed to meet the criteria but the threshold will only apply from the next tax year.

Last updated: 18 May 2016