The Marshall Liberal Government has announced it has reached an agreement with the Hon John Darley MLC to further amend its land tax reform package in exchange for his support for the passage of the amended bill this week.
Treasurer Rob Lucas said Mr Darley had made it clear to the Government that he wanted further amendments to the bill in particular to assist smaller ‘mum and dad’ property investors.
The major amendments to the Land Tax (Miscellaneous) Amendment Bill 2019 will include:
- A $25m transition fund over 3 years for eligible individual taxpayers and company groups with possible relief up to $50,000 (50% of the maximum possible rebate) in 2020-21, $30,000 (30%) in 2021-22 and $15,000 (15%) in 2022-23 from any increased land tax payable due to new aggregation changes. This transition fund disappears after 3 years and gives taxpayers the opportunity to restructure their affairs over 3 years;
- A reduction in land tax for land valued between about $755,000 and $1.1 million from 1.65% to 1.25% to 2020-21 and to 1.0% in 2022-23;
- An increase in the threshold for the top 2.4% tax rate to $2.0 million (indexed) from 2022-23;
- A land tax concession for eligible developers of affordable housing based on land for affordable housing not being aggregated with other land holdings subject to certain criteria;
- An extension to the beneficiary nomination period for discretionary trusts to 30 June 2021;
- Relief for eligible developers holding land for ‘greenfield or brownfield’ residential development of 10 allotments or more.
“This amended package will provide further relief to thousands of smaller ‘mum and dad’ property investors whilst achieving a fair and much more competitive land tax system,’’ said Mr Lucas.
“If this amended package is approved by the Parliament, the Government will have achieved two key objectives it set for its comprehensive land tax reform.
“The Government has refused to compromise on its objective to massively slash the top land tax rate in SA.
“This rate will now be slashed from 3.7% to 2.4% and will help create an investment attracting and job creating land tax system.
“At 2.4%, the top rate will equal the average top rate of all mainland states in Australia. And the increase in the threshold to $2m at which the top rate applies, also makes our system more competitive.
“The Government has also refused to compromise on its objective to introduce changes to aggregation rules in SA.
“The amended package represents a fairer and more equitable system as it introduces changes to aggregation rules similar to most other states.
“They will mean it will no longer be possible for an investor to own $3m in property in 7 separate companies and not pay a single dollar in land tax.”
The Government has not agreed to submissions from some industry stakeholder groups to commit to further reduce land tax as a direct result of extra land tax collected through the revaluation exercise.
The former Labor government had already budgetted for an extra $19m per year to be collected from the revaluation exercise and some industry stakeholders believe that estimate will be an underestimate.
The Government also accepts that the investment attracting 2.4% top rate will lead to increased investment activity in commercial and industrial property in SA, which will also lead to increased valuations and land tax revenue.
“It needs to be noted that the only alternative option left to the Government if the bill was defeated was the already legislated 3 year cost of $150m so the net cost to the Government of the amended package is $39m over 3 years.
This comprehensive land tax reform package is one part of the Government’s investment attracting, jobs creating, economic growth strategy based on reducing the costs of doing business in SA:
- Big cuts in land tax including the top rate slashed from 3.7% to 2.4%
- Payroll tax abolished for all small businesses
- $90m per annum cut in ESL bills for businesses and households
- Further cuts in workers compensation premiums
- Cuts in water costs from July next year