Busting the tall tales, fiction and falsehoods around land tax

15.10.2019

The State Government has moved to correct some of the confusion, myths and falsehoods being perpetuated by its opponents about its revised land tax reforms, with many South Australians being wrongly led to believe they are going to pay more tax as a result.

The Government’s Land Tax (Miscellaneous) Amendment Bill 2019 will be introduced to Parliament tomorrow.

Treasurer Rob Lucas said the public consultation phase had revealed the same six myths had been perpetuated time and time again which was creating unnecessary angst and uncertainty in the community.

“It’s become abundantly clear that many South Australians are being terribly misinformed when it comes to our positive land tax reforms and it’s time to bust some of those myths,” said Mr Lucas.

“The Property Council and its supporters have been perpetuating many of these mistruths and fuelling this uncertainty for a while now. For example, as part of their costly campaign against our changes, they’ve taken out full page press ads featuring a retired couple lamenting the alleged impact to their Self Managed Super Funds.

“When, in fact, changes to aggregation rules will have absolutely no impact on property held within Self Managed Super Funds. To suggest otherwise is blatantly misleading.” 

Among the main myths are:   

Myth 1: That a person’s principal place of residence (PPR) will be liable for land tax

Fact: A person’s principal place of residence remains exempt from land tax

Myth 2: A person with a PPR and another investment property (eg holiday home) will have those properties aggregated.

Fact: A PPR will NOT be aggregated with any investment properties

Myth 3: That Self Managed Superannuation Funds (SMSFs) will be affected by changes to aggregation rules and liable for a trust surcharge.

Fact: SMSFs will be excluded from changes to aggregation rules. If a property is held within an SMSF, it will not attract a trust surcharge. Property held in a SMSF will not be grouped with property owned by the taxpayer outside the SMSF.

Myth 4: A husband with a property in his name, and a wife with a property in her name will have their properties aggregated.

Fact: A husband with a property in his name, and a wife with a property in her name, will NOT have their properties aggregated.

Myth 5: All trusts will be aggregated

Fact: Different trusts will not be aggregated if they pay the surcharge . Trustees of existing family trusts (discretionary trusts) will have a choice of nominating a beneficiary  or paying a surcharge of 0.5% (capped at an estimated maximum value of $5,490).   Similar rules will apply for fixed and unit trusts.

Myth 6: Individuals who hold property as natural persons, trusts and companies will have all their property aggregated.

Fact: Individuals will be able to hold land as a natural person, in trust and in companies without the properties being aggregated into one single ownership. Property held as a natural person will not be aggregated with property owned in companies and will not be aggregated with property owned in trusts (if the trust pays the trust surcharge).

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