Australian Property News

Big rises expected for rates and land tax

Posted on Tuesday, March 16 2010 at 11:35 AM

A Bill tabled by the Queensland Government in parliament in February is likely to result in big increases in rates and land tax charges for commercial tenants, property developers and investors, according to Warlow Scott Lawyers.

The Bill changes the definition of 'unimproved value' of land for government valuation purposes.

Currently land tax and rates are calculated on a formulae based on the 'unimproved value' of the land, which is the value of the land without any buildings or improvements on it.

The Bill now amends the definition of 'unimproved land' to be the value of the land put to its 'highest and best use' which takes into account (among other considerations) the development potential of the land, the value of the leases held over the land and goodwill.

This new value will then be used to calculate both rates by local councils and land tax by the State Government.

While both property developers and commercial tenants will be affected by the Bill, Warlow Scott Lawyers say mum and dad property investors won't escape the changes either.

"The Bill also amends the appeals process for anyone who appeals their rates or land tax charges," the company says in their newsletter.

"Previously if a landowner appealed the valuation, it was effectively up to the government to justify how the valuation was reached."

"Under the Bill, the onus of proving the valuation is incorrect effectively now falls to the landowner, who will need to specify their objections with proof."

"In practice this will mean that you will not be able to appeal the valuation, without first spending hundreds of dollars on obtaining your own independent valuation first."

The most damaging part of the legislation, according to the Warlow Scott Lawyers is that it will be applied retrospectively back to 2002.

"Whilst the government states that previous paid land tax and rates bills will not be affected, any outstanding land tax or rates bills will be affected and any appeals under way (including court actions) will be greatly weakened, if not dismissed," it says.

According to Warlow Scott Lawyers it's expected the Bill will be rushed through Parliament and will become law in the coming weeks.