The Property Council’s ‘fight for a fair go’ for property owners in South Australia has paid dividends with major improvements negotiated to the state’s new land tax regime.
The SA Government finally secured parliamentary approval for the controversial changes last Thursday following the fifth revision to its bill.
The government first announced its plan to introduce aggregation of land holdings in June to align more closely with New South Wales and Victoria.
The Property Council’s South Australian division spearheaded the campaign against the changes which it said would take a sledgehammer to property owners, ranging from ‘mum and dad’ and ‘nest egg’ investors saving for their future through to family-based and institutional investors.
“The government’s early proposed changes would have made South Australia the least attractive state in Australia to invest,” says Daniel Gannon, the Property Council’s executive director.
After 163 days of campaigning for a fair go for property investors, the revised package supported by Parliament has delivered a 35 per cent reduction in the top land tax rate, a 54 per cent increase to the top threshold, and locked in an external review of the reforms in the future.
“These historic reforms to rates and thresholds now pave a better pathway for future investment and a lower land tax liability for the majority of property owners.”
Gannon also responded to criticism from some quarters of the Property Council’s decision to accept a modified land tax package.
“From the outset, we have been at the frontline of the fight for a better deal for property investors and our economic future.
“Is it a perfect result? No, but it’s a huge improvement on what the government originally proposed and doesn’t indefinitely handcuff the state to an uncompetitive top rate of 3.7 per cent.
“On balance, we think it’s a better deal for property owners that will also maximise investment and support job creation which is essential to South Australia’s economic prosperity.
“We needed to get an outcome that was better for property owners and sent a clear signal that South Australia was open for investment,” Gannon says.
According to SA Treasurer Rob Lucas, the reform package will deliver tax cuts of $189 million over three years and is a once-in-a-generation opportunity for significant land tax reform that will benefit South Australians both now and in the future.
“This reform package not only massively slashes the top land tax rate from a national high 3.7 per cent to just 2.4 per cent to create a more competitive business and investing environment for South Australia, but delivers a far more equitable and fairer land tax system,” Lucas says.
SA Land Tax Reform package
Top threshold will increase from $1.3 million to $2 million from FY23 – the top threshold will increase by 54% which brings South Australia closer to other jurisdictions
A new threshold has been introduced between $1.098 million and $2 million with an applicable rate of 2%, delivering tax reductions for majority of property owners.
A significant adjustment has been made to tax rates for portfolios valued between $755,000 and $1.098 million with an applicable rate of 1% in FY23. 39% reduction as a result of these reforms.
An external third-party review of reforms will be undertaken in 2023.
A $25 million transition fund over three years established for eligible individual taxpayers and company groups with possible relief of up to $50,000 (50% of the maximum possible rebate) in FY21, $30,000 (30%) in FY22 and $15,000 (15%) in FY23 from any increased land tax payable due to new aggregation changes. This transition fund gives taxpayers the opportunity to restructure their affairs over three years.
A 12-month land tax concession for eligible developers of affordable housing based on land for affordable housing not being aggregated with other land holdings subject to certain criteria.
An extension to the beneficiary nomination period for discretionary trusts to 30 June 2021.
Relief for eligible developers holding land for greenfield or brownfield residential development of 10 allotments or more.
Affordable housing initiative to deliver 1000 new affordable homes in South Australia, at a cost to government of approximately $400 million.
Expansion of the HomeStart Starter Loan scheme with an extra 500 new loans being made available for eligible low income South Australians, costing the government $5 million and helping boost the residential sector.
Aggregation measures remain in the Bill.