Many people think that Land Tax doesn’t apply to them, not realising that it can indeed apply to the land they own unless an exemption applies or they do not reach the threshold
Every landowner needs to be aware that Revenue NSW has a compliance program. Statistics show that in the 2022/23 financial year, Revenue NSW conducted 24,669 investigations. That number substantially increased in the 2023/24 year to 45,192, resulting in the collection of nearly $436 million in additional revenue.
Revenue NSW advises that Land Tax and surcharge Land Tax compliance includes:
- updating Land Tax details (lodging returns) on time, including accurately reporting changes to non-exempt land,
- only applying for exemptions and concessions that they are entitled to, and
- keeping documentation to support exemptions and concession applications.
The last 5 years will be looked into on review.
With increased compliance activity, it is important for landowners to have their affairs in order. If this is not done, land tax assessment notices for 5 years could become very daunting.
The most common Land Tax exemption is where the property in question is a principal place of residence. But the exemption will not apply if you own less than 25% of the property. If you own another property or one in a trust or company, Land Tax could also become payable unless an exemption or the threshold applies.
Foreigners pay a Land Tax Surcharge (that is, they pay more Land Tax) so anyone looking at purchasing land should make sure they are not a ‘foreign person’ under Revenue NSW criteria to avoid a rude shock about Land Tax after purchase. This will also impact their stamp duty obligations.
Thinking of buying in a Trust? Make sure you are aware of the Land Tax rules that apply, including those that apply to foreign persons.
Experience has shown us that Land Tax Assessment Notices are not always correct, particularly where a landowner has not updated their records properly each year. As such, it’s important that landowners have their Land Tax records correctly updated with Revenue NSW. We have seen people being charged Land Tax because they did not identify a property as a principal place of residence or did not provide evidence to prevent the foreign surcharge applying.
It is the landowner’s responsibility to lodge a Land Tax return when required and to accurately apply for exemptions they may be entitled to. Considering the increase in compliance activity taking place, every landowner and prospective purchase should make sure they are aware of their Land Tax responsibilities.
