Who will be next in Palaszczuk’s outrageous land-tax grab?

Landlords and renters will both suffer but imagine what might happen if every other state decided to copy Queensland.

Queensland Premier Annastacia Palaszczuk tours the new GE Aerospace Brisbane facilities on August 23. Picture: NCA NewWire / Dan Peled

Who can forget the Queensland premier saying in August 2020 that Queensland hospitals were for their people only? Queensland hospitals might be just for Queenslanders, but all property outside Queensland is now for Queenslanders too. In an extraordinary turn of events, the Queensland government will soon be effectively charging land tax on investment property all over Australia, when it is owned by anyone who also owns a property in Queensland.

This staggering move, which has left the real estate sector and related services industries reeling, sets an alarming precedent. Imagine what might happen if every other state and territory decided to copy Queensland, and tax the value of properties in every other state?

The Queensland government website says: “From 30 June 2023, when we calculate land tax, we will use the total value of your Australian land. This includes your taxable land in Queensland and your relevant interstate land. ‘Relevant interstate land’ includes land located in another state or territory that is valued under interstate valuation legislation and is not excluded interstate land.”

There is a list of excluded land, which is non-investment property, including the principal place of residence. The government says they are actually not taxing land in other states, but just using their value to recalculate the land tax owed in Queensland. Brilliant weasel words along the lines of “we are not hitting you in the head with a plank, it is simply something that looks and feels like a plank”.

The website gives an example of the new system in action. “On 30 June 2022, Lena owns land in Queensland with a taxable value of $745,000. Her land tax is calculated using the rates for individuals. Taxable value of land: $745,000. We will issue an assessment notice for $1950 for the 2022-23 financial year. On 30 June 2023, the value of Lena’s land in Queensland has not changed. But Lena now also owns land in Victoria valued at $1,565,000. The total value of Australian land owned by Lena is $2,310,000, which means the land tax is calculated using a higher rate for individuals. We will issue an assessment notice for $8422.37.”

Poor Lena, what a mistake it has been for her, to own an investment property in Queensland.

The Queensland government’s draconian move has had little scrutiny. Industry insiders knew the legislation was being put to parliament, but assumed that as it was so outrageous there was no chance it would get passed. Some thought it was unconstitutional, and would not even be put to the vote. How wrong they all were.

A Clayton Utz briefing note confirms the Revenue Legislation Amendment Act (Qld) 2022 was assented to on June 30. It says changes to the Land Tax Act 2010 (Qld) will impact Queensland landowners as “assessment of Queensland land tax liability will take into account the value of interstate landholdings”. Ultimately, “this will mean an increase in land tax liability for anyone who owns land in Queensland as well as non-exempt property in another state or territory”.

Don’t for a minute think that any land tax paid to governments outside Queensland will be taken into account, with an offset consideration. According to the advice, the increased tax liability in Queensland does not impact on any taxes payable in other states and territories. Thinking back to poor old Lena, she will have to pay land tax on her Victorian property twice. Once to Victoria, and once to Queensland. It is double taxation, on the same asset.

To illustrate the increase, Clayton Utz gave an example of an individual who currently owns one property in Queensland with a taxable value of $745,000 and one property in NSW with a statutory value of $1,000,000.

Under the current arrangement, the individual will pay $1950 in land tax this financial year in Queensland for the Queensland property. Using the same example in the 2023/2024 financial year using the new system, the same individual will pay $7169.29 in land tax.

Property owners must “assist the Queensland Revenue Office in determining other Australian landholdings and the statutory value of those landholdings” by way of “notice in an approved form (including property description, statutory value and interest)” and “failure to comply with notification obligations will be an ­offence”.

Simon Pressley from Propertyology sounded the alarm for the rental sector in his industry newsletter. He points out that this latest policy move will hit land owners hard, and only worsen the current housing shortage.

According to Pressley’s research, 1.7 million Queenslanders live in 620,000 rental properties, and of these, 54,000 are government rented homes, and 576,000 are privately rented. It is the private rental sector, made up of ordinary investors, that does the heavy lifting for provision of rental dwellings.

The government might think they are helping aspiring homeowners by smashing existing owners, but insufficient participation from property investors in the rental market creates a shortfall of supply, and when supply of anything is too low, prices rise. This housing crisis and rental crunch has been created by poor policy decisions that have over many years discouraged private investment in rental housing. With this latest move, the situation looks set to worsen. Who would want to own an investment property in Queensland now?