Property industry fury grows over land tax changes

Property leaders say the new land tax changes in the State Budget could bring the state to crisis point and is “of proportions we have not experienced before”.

Steve Maras and with Property Council president Daniel Gannon. Picture: Tricia Watkinson

• ‘What’s fair?’ Treasurer hits back over land tax rise
• Property Council fears land tax assault could flatten investors

Property leaders are set for a showdown with Treasurer Rob Lucas as the fallout from last week’s Budget threatens to send the industry into turmoil.

President of the Property Council of Australia (SA) Steve Maras said the proposed increases to land tax in SA — already the highest in Australia — could bring the state to crisis point.

“Capital will stop coming to SA, there will be a decline in investment and people will stop spending money. This is of proportions we have not experienced before,” he said.

The new measures, effective from July 2020, mean owners of multiple properties can no longer use trusts to avoid land tax, but must pay up to 3.7 per cent on their total holdings.

Mr Maras, one of the state’s top developers, said land owners were uncertain whether to remain in SA or sell up and leave.

He said a pending re-evaluation of all property values SA would only worsen matters, with likely higher values leading to a double hit to land owners.

He rejected the argument that land owners have previously created trusts to avoid paying excessive tax.

Such asset protection has long been a building block for many migrant families, Mr Maras said, ahead of a meeting with Mr Lucas this week.

John Culshaw who owns the CBD’s Majestic hotel and other SA properties said he faced a possible 76 per cent tax hike.

“It is the oddest thing I have known in 40 years,” he said. “There is a real anger out there, psychotic anger. What sort of message is this sending out to people who might want to invest in SA?”

Pat Gerace, chief executive of the Urban Development Institute of Australia (SA) said the new rules showed a lack of understanding of the development process and the magnitude of tax already paid by the property sector in SA.

Land tax will reduce to 2.9 per cent by 2027. Mr Lucas said the property industry needed to explain how someone owning seven properties at $400,000 each paid no land tax.