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Your views: on land tax and saving trees

Reader contributions

Today, readers continue the debate over land tax and the felling of mature trees.

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Commenting on the story: Lucas threatens new taxes, budget cuts if land tax reform blocked

I suspect the majority of the South Australian population that doesn’t own multi-property investment portfolios is largely unconcerned about the proposed land tax changes.

However, if Treasurer Rob Lucas follows through on his threat to impose new taxes and budget cuts should the aggregation reforms fail, it will affect everyone.

In that case I foresee that the distaste a lot of people hold for developers and speculators will intensify dramatically. – Carol Faulkner

Now that the draft bill has been released, it is clear that this measure is more complex than it first appeared.

It is clearly not a measure that just affects the top end of town. It will potentially affect every landholder of more than one property where the total land value is above the threshold.  

The current aggregation rules (introduced by Mr Rann and Foley) will be repealed, except to the extent of determining the home ownership exemption.

As I understand it, this aggregation measure will be replaced by a measure that looks at the individual’s ownership of land across a number of ownership types, including individually, jointly (and tenants in common) and through nomination by a trustee, where the trust currently holds land.

Then an assessment of land tax liability will be made for each of the ownership types, as well as on the aggregated value of land that the individual holds (through the various ownership types).

A pro-rata offset of the land tax paid by the other ownership types will be allowed against the land tax assessed on the aggregated land holding of the individual.

This can reduce an individual’s land tax to zero but not below (i.e. no refund).

Where a trust doesn’t nominate a beneficiary as the land owner, or newly acquires land it will be assessed at a lower threshold ($25,000 as opposed to the proposed $450,000) and at somewhat higher rates.

Trusts will pay higher amounts of land tax on the same land value than other forms of holding. It will then be a judgement call whether the benefits of owning property in a trust offset the much higher land tax bill compared to other forms of ownership.

Where land is held by a company, it together with other ‘related’ companies will be assessed for land tax purposes as one entity, i.e. land values will be aggregated across the related companies.

Whether companies are related will be determined both by ownership and control (shareholding and directorship).

Whilst we don’t yet know thresholds and rates (other than the top rate and bottom threshold) by using current rates and thresholds, it’s pretty clear that in many scenarios where multiple properties are owned by one group of owners, the land tax bill will rise – sometimes by a staggering amount.

I find it hard to understand how this measure will reduce the overall land tax take.

Whilst it’s now somewhat dated, the Henry tax review addressed land tax.

In Chapter 12 at C2 at no. 52 of its list of recommendation, the review recommends that a land tax should be broad based; In principle all land should be subject to land tax and at recommendation 54: There are a number of incremental reforms that could potentially improve the operation of land tax, including: ensuring that land tax applies per land holding, not on an entity’s total holding, in order to promote investment in land development.

These ‘reforms’ do pretty much the opposite of the Henry recommendations. 

Rather than make a fair system, these reforms further narrow the base and consequently increase the amount payable by the ever-decreasing number of payers.

Without significant increases to the upper thresholds, SA’s land tax reform will further decrease this state’s attractiveness as a destination for investment, and we will continue to see headlines proclaiming our leadership in the nation’s unemployment rate. – John Wyk

Commenting on the story: City council to approve axing historic North Tce trees

I am from Wagga Wagga NSW, and In July I attended the Hans & Nora Heyson exhibition at The National Gallery of Victoria and then travelled via Adelaide to the Flinders Ranges and Marree.

I was so impressed by Hans’ protest so many years ago, to his council which was removing beautiful trees by “buying the trees” himself.

In my travels I witnessed the results of many, many other South Australians, like Hans, who have promoted the state’s valuable trees.

I saw so many fabulous old gums: by the roadside, on farms, in municipal gardens and of course in National Parks. I thought: “How smart is SA!” 

Keep the Adelaide Parklands, build elsewhere! – Sarah Danckert

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