Land tax in South Australia for 2020–21 is levied on the aggregated site value of all land owned in South Australia as at midnight on 30 June 2020. The site value of land is, broadly, the market value of unimproved land.

COVID-19 measures

Landlords who lease land to a residential or business tenant suffering financial distress resulting from the COVID-19 outbreak may be entitled to land tax reductions totalling up to 50% of the land tax attributable to the parcel of leased land in the 2019–20 land tax year.

The land tax reductions are conditional on the benefit being passed on to tenants in the form of a reduction in rent and are also available to landlords who are unable to secure a tenant because of COVID-19 provided that the land was leased as at 30 March 2020.

A reduction of up to 25% of land tax attributable to the leased land is available in respect of the amount by which rent payable by an affected tenant is reduced during the period from 30 March 2020 to 30 October 2020 and the period from 31 October 2020 to 30 April 2021. Separate applications must be made in respect of each of these periods.

In the case of residential tenancies, at least one of the residential tenants must be able to declare that they are experiencing financial hardship due to COVID-19. Where the tenancy is non-residential, a tenant must have annual turnover of no more than $50 million, and at least one tenant must be eligible for the Federal government’s JobKeeper payment.

Businesses who operate from their own land as at 31 October 2020 may also be eligible for a 25% reduction on the property’s 2019–20 land tax where they have annual turnover of $50 million or less and are eligible for the JobKeeper payment.

Taxpayers paying quarterly in 2019–20 could defer payment of their third instalment by up to 6 months from the due date, and defer their fourth instalment payment by up to 3 months. Taxpayers who have already paid 2019-20 land tax can claim a refund or a credit against a future land tax debt. Details on application for relief are available from Revenue SA.

Ownership

Land tax liability is assessed on the land interest held by an owner of the land. An “owner” includes the registered owner of freehold land, any person entitled to legal or equitable ownership, persons with a right to purchase the land and a shareholder in a home unit company. Lessees of land under a crown lease, tenants in common who lease a portion of the land and certain long-term lessees or occupiers of “shack sites” on privately owned land near the Murray river may also be owners for land tax purposes.

Where there is more than one owner of land, all owners may be treated as a single owner for assessment purposes, and the Commissioner may assess owners in one capacity (eg trustees, equitable owners, a lessee under a perpetual lease) as the sole owner or owners of the land. Minor interests in land of 5% or less are disregarded in the assessment. Any interest in land less than 50% may be disregarded in the assessment if it appears the interest was created to reduce a land tax liability.

Assessment

For 2020–21 and later land tax years, land tax assessments include all land owned by a person on the taxing date, irrespective of whether the land is held directly, or through a trust or company. This is similar to assessment of land tax in NSW, whereby the value of ownership interests held through trust or company arrangements are aggregated for the purpose of assessment. The new regime replaces the taxation of land on the basis of separate legal holdings.

Taxpayers who have an increase in their land tax liability which is solely the result of the aggregation changes can seek transitional relief in the form of a reduction in land tax liability. The land tax reduction is assessed for each relevant parcel of land owned as at 16 October 2019 and assessed by reference to the increase in land tax payable under the new regime over that which would have been payable on that parcel in a 2019-20 assessment. This transitional relief is available in each of the 2020-21, 2021-22 and 2022-23 land tax years for a minimum increase of $2,500 and capped at $50,000, $30,000 and $15,000 in each of those years respectively. Applications for transitional relief should be made by 31 March in each land tax year to RevenueSA.

Property developers who subdivide land for affordable housing may seek an ex gratia concession for the difference between the assessed land tax liability and the amount which would have been payable on each parcel of land absent any aggregation of land holdings. From 1 March 2020 ex gratia relief is also available to lessors who provide affordable housing through a participating community housing provider.

Related companies

For 2020–21 and later land tax years, related corporations that own land are assessed as if they were a single corporation. Related companies are grouped together and land tax is assessed on the aggregate taxable value of all lands owned by group members as if the land were owned by a single entity.

Exemptions

Land that is exempt from the tax includes:

• land used as a principal place of residence, including retirement villages, is fully exempt. If a home business activity is carried on at the property a partial exemption may be available. Exemption may be available for up to 3 years after a home is destroyed or rendered uninhabitable if an owner intends to rebuild or repair the building within that time
• certain land used for primary production
• land that is owned by prescribed associations and is used for relevant purposes (eg sporting, recreational, historical and agricultural shows, literature, science, languages, the arts or the preservation of historical, traditional or cultural heritage or for similar purposes)
• land used for religious, hospital or library purposes
• land owned (or in certain situations occupied) by certain charitable, educational, benevolent or philanthropic organisations
• land owned by a prescribed body and used for the benefit of indigenous people
• land used for caravan parks, residential parks for retired persons and licensed supported residential facilities
• land used for the provision of residential care by an approved provider under the Aged Care Act 1997 (Cth).

A 5-year land tax exemption is available for investors who entered into off-the-plan apartment contracts between 22 June 2017 and 30 June 2018. The exemption does not apply to foreign purchasers.

Deceased estates

In certain circumstances, land used by a deceased person as a principal place of residence immediately before their death may qualify for ex gratia relief from land tax for the first financial year following the death of the owner. Similar relief is provided where an owner moves into residential care.

Trusts surcharge

From 2020–21 owners of land held in trust with a taxable value greater than $25,000 may be assessed at trust rates of land tax. Trust rates are only payable on a separate assessment, not on a joint assessment.

Trustees must have notified RevenueSA that they own South Australian land on trust by 31 July 2020, and of any subsequent change in ownership within one month of those changes. Notifications can be made via the RevenueSA Online portal.

Fixed, discretionary and unit trusts which would otherwise be taxed at trust rates may be taxed at general rates where appropriate notification of beneficial interests in the trust is made to RevenueSA. A trustee of a fixed trust or a unit trust must notify RevenueSA of all the beneficial interests in the trust. Land which was subject to a discretionary trust as at 16 October 2019 may be taxed at general rates where the trustee lodges a written notice specifying a single beneficiary as the designated beneficiary of the trust by 30 June 2021. Land acquired by a trustee of a discretionary trust from 17 October 2019 onwards is taxed at trust rates.

Charitable trusts, superannuation trusts, estate administration trusts and various public and concessional trusts are excluded from surcharge. Land tax exemptions, including the principal place of residence exemption, can apply to the trust surcharge where the land is used and/or occupied in the requisite manner by a beneficiary or beneficiaries.

Objections and appeals

Taxpayers can lodge written objections to assessments within 60 days from date of service of a notice of assessment or up to 12 months later if allowed by the Minister. Appeals can be lodged up to 60 days from the date of the objection decision or anytime after 90 days from lodgment of the objection if no objection decision has been made and the taxpayer has given 14 days notice of the intention to appeal.

Rates and thresholds

Land tax thresholds are indexed annually based on the average percentage change in site values.

General land tax rates for 2020–21

Taxable value of land ($)	Land tax payable ($)
0 – 450,000	Nil
450,000 – 723,000	0.50 for every 100 (or fractional part) over 450,000
723,000 – 1,052,000	1,365 + 1.25 for every 100 (or fractional part) over 723,000
1,052,000 – 1,350,000	5,477.50 + 2.00 for every 100 (or fractional part) over 1,052,000
above 1,350,000	11,437.50 + 2.40 for every 100 (or fractional part) over 1,350,000

Trust land tax rates for 2020–21

Taxable value of land ($)	Land tax payable ($)
0 – 25,000	Nil
25,000 – 450,000	125 + 0.50 for every 100 (or fractional part) over 25,000
450,000 – 723,000	2,250 + 1.00 for every 100 (or fractional part) over 450,000
723,000 – 1,052,000	5,477.50 + 2.00 for every 100 (or fractional part) over 723,000
1,052,000 – 1,350,000	10,737.50 + 2.40 for every 100 (or fractional part) over 1,052,000
above 1,350,000	17,899.50 + 2.40 for every 100 (or fractional part) over 1,350,000

If you have any question regarding your business and property investment or require our assistance, please contact our office on (08)7120 2384 or support@tagaus.com.au.