In New South Wales land tax is payable on land with a total unimproved value of $734,000. The rate is $100 + 1.6% of the excess over $734,000. If the land value is over $4,448,000 then the rate is $56,724 + 2% of the excess over $4,448.000.
Your principal place of residence and primary production land are exempt. Like all taxes there are extra complex rules in respect of trusts, boarding houses and low cost accommodation, foreign ownership, related companies and trusts, SMSFs. The ownership point was midnight 31 December 2019.
The Office of State Revenue is sending emails to landowners suggesting that you deal direct with them. The list of issues that were just mentioned above indicates that the notices should come to us for checking. We have over the years picked up issues that need resolution and there is no way clients can do that themselves.
As noted above, landowners are now receiving emails directly from the Office State of Revenue. Whilst this may initially seem appealing to reduce professional service fees, be warned that this is at your peril.
Already we have aided clients who have unknowingly been caught out by the Office State of Revenue. One client was unknowingly paying the extortionate foreign person charges believing this was the correct fee, despite having permanent residency in Australia.
In another instance, a family was buying commercial property. The funds bonds were coming from their family company. Usually you buy property in your individual names to get the 50% capital gains tax deduction. However in this case, to do that either the company would have to lend the individuals the money under a DIV 7A loan agreement or the company would have to pay them a dividend and then pay the appropriate 25% income tax on that dividend.
In this case we set up another company but with different family members so as to avoid the land tax grouping provisions. No interest has to be charged on a loan from one company to another, thus avoiding DIV 7A dividends.
Have you heard about the proposed Superannuation Guarantee Amnesty? We explain how the Bill will affect employers and employees.
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