NSW land tax crackdown

Oct 27, 2019 | News and Updates, Property Investing, Tax Tips

Property developers, foreign owners, farmers and trusts could be among those hardest hit by a NSW government crackdown on taxpayers who have incorrectly avoided paying land tax.

The crackdown, announced earlier this month by Revenue NSW, expects to recoup $100 million in the first year with an anticipated five-year lookback period.

The agency’s efforts to identify those incorrectly self-assessing their land tax exemptions have been boosted by an additional $7.1 million in funding to improve its information management and hire additional compliance officers.

Land tax is expected to add $4.2 billion to state coffers in the 2019 financial year, according to the 2019-2020 Budget Statement.

“Considering the government has said they expect to recoup approximately $100 million in unpaid land tax in the first year of this crackdown – clearly there is an anticipation that there are many instances of errors in self-reporting,”

“NSW is quite litigious and wins most of its land tax cases. The reason they win so often is that the burden of proof falls on the taxpayer – and without consistent documentation, this can be a difficult burden to meet.”

In the case of trusts, all discretionary trusts, unless worded otherwise, were generally considered to fall under the definition of a foreign person and thus liable for the land tax surcharge of 2 per cent.

“This may be a surprise to families and small companies, as well as individuals from other jurisdictions who have a different definition of foreign resident for the purposes of land tax,”

Revenue NSW has given taxpayers a three-month amnesty until January 31 to disclose landholdings and avoid penalty interest charges.

Those potentially liable for land tax are advised to act now given much of the amnesty period covered the busy end of year and Christmas and New Year holidays.


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