Money
Issue No. 25 - October/November 2005
SA land tax changes fail reality check
by John Rawson
According to Deloitte Tax partner John Rawson, while the recent changes to the land tax regime were welcome, the land tax relief was only targeted at one end of the scale.
“The changes merely made South Australia more competitive at the lower values of land, leaving businesses and investors in multiple properties only marginally better off,” John says.
“In addition, given the recent increase in property prices in South Australia any benefit that may have been obtained has probably already been lost.
“There seems to be a real case for indexation of the land tax thresholds rather than retaining the thresholds at static levels to ensure that only a real increase in property value will result in increased taxation.
“When comparing the South Australian land tax rates with those of other jurisdictions, at the lower end of the scale, South Australian rates are very competitive although still higher than those of Victoria.
“After the changes, the savings of between $210 and $2,850 can be expected but can hardly be termed as significant.
“Once the land value increases to $2 million – typically the landholding of fairly significantly sized businesses such as mid-scale industrial manufacturers – the land tax rate in South Australia far exceeds that of all Australian jurisdictions despite the recent changes which offer only minimal relief.
“Even those jurisdictions that have adopted multiple rate scales to differentiate between individuals, companies and trusts, including Queensland, New South Wales and potentially now Victoria, have lower land tax rates applicable to these classes than South Australia’s ordinary rates.
“Significantly, as the value of the property increases, the gap between South Australia and the rest of the country widens.
This is a real disincentive to large-scale infrastructure investment in South Australia.
“Moreover, when combined with the fact that S...
