The state government has announced an overhaul of its controversial land tax system with a "simplified" model it says will save landowners $847 million over the next four years.
In his Budget speech this week, Treasurer Terry Mackenroth told Parliament two new simplified tax schedules, one for residents and one for companies, will be introduced from July 1 to replace the current 19-step schedule, statutory deductions, resident rebate and phasing-in rebates.
"The effective reduction in land tax rates will be greatest for smaller business and resident investors," he says.
"Nevertheless, companies, trustees and absentees with high-value landholdings will have their tax rate reduced from 1.8% to 1.5% and higher-value resident investors will have a tax rate of 1.25%."
Mackenroth says the government will also retain three-year averaging to offset future increase in land valuations.
Business will not be subject to land tax until their landholdings reach $300,000 compared with $170,000 currently.
Resident taxpayers will not be subject to land tax until their landholdings amount to $450,000 – compared with the current threshold of $276,000.
He says caravan and residential parks will be exempt from land tax if more than 50% of their caravans or manufactured-home sites are occupied by long-term residents.
"We will keep the current exemptions for one's principal place of residence, land used solely for agriculture, pasturer dairy farming and land owned by eligible societies, clubs or associations," he says
Under the new structure, the land tax schedule for companies is as follows:
- $300,000-$450,000: $1,500 + marginal rate 1.5%
- $450,000-$750,000: $1,500 + marginal rate 1.5%
- $750,000-$1.25 million: $8,250 + marginal rate 1.65%
- $1.25m-2m: $16,500 + marginal rate 1.8%
- $3m+: rate of 1.5% on full value.
Companies with an unimproved land value of $500,000 currently pay $5,750 but the revised formula will see them pay $4,500.
For resident individuals, the new schedule is:
- $450,000-$750,000: $400 + marginal rate 0.7%
- $750,000-$1.25 million: $2,500 + marginal rate 1.45%
- $1.25m-2m: $9,750 + marginal rate 1.5%
- $3m+: rate of 1.25% on full value.
Additionally, Mackenroth says the government will provide significant tax cuts for business over the next seven years.
"We already abolished credit duty last year and will scrap debits tax from July 1 this year, but several other duties are also on our chopping block," he says.
"Lease duty and credit business duty are set to go on January 1 next year, then hire duty and duty on marketable securities in 2007, mortgage duty over 2008 and 2009, and finally transfer duty on non-realty business assets in 2010 and 2011.
"The progressive abolition of these duties will effectively save Queensland business $3.5 billion over the next seven years."