$700m land tax slug

It’s that time of the year again in the property industry. Property owners around WA are receiving their annual land tax notices from the State Government and this year, the assessments include the 12.5 per cent land tax increase announced in the May Budget. According to the Property Council of Australia, W N.s lopsided land tax system has resulted in most of the $700 million dollars of land tax paid in WA being carried by a” small group of tax who own property port- In turn, much of the tax is passed on to commercial tenants, which also results in a lop sided outcome for businesses paying rent. The Council said less than 6 per cent of land tax payers pay 80 per cent of WA’s total land tax and, in years, they incur big increases in their land tax bills. “This is caused by a system that levies land tax on aggregated property holdings, which pushes taxpayers up into higher tax thresholds,” it said. Perth-based property syndicate Property Investment Resources reported a land tax increase of 80 per cent for an office complex in West Leederville. In 2012, the property generated a land tax assessment of $23,346 but it rose to $42,185 this year. While noting the 80 per cent increase included a 33 per cent valuation increase on the Railway Parade comp1ex, Property Investment Resources manager John Reidy-Crofts said it was an unacceptable hike. “Land tax is a very important part of State revenue and I don’t have a problem about getting taxes on an income but getting taxes on land valuations, I think the Government has got to have a rethink about that,” he said. Most commercial property leases allow landlords to recover land taxes from their tenants and while the syndicate plans to pass on the cost of the extra tax to its tenants, Mr Reidy-Crofts said it was an unfair increase. We can recover the money from our tenants but if our tenants’ payments keep going up, it makes them less viable,” he said. “Everybody has to pay their way but for tenants to be told there is a ~,600 bill to pay when last year it was less than half that, it’s a big ask.” . Mr Reidy-Crofts said there were well-documented reasons for Perth rents to be high compared with the Eastern States but keeping rates and taxes down would help make the city more competitive. In response to industry complaints, the Property Council said it had launched the Make Land Tax Fairer campaign, calling on the State Government to review land tax. “The review would investigate options to make the land tax system fairer by evening up the land tax burden among tax payers and broadening the base,” it said. The Property Council said changes to thresholds and numerous exemptions – including land owned for primary production –and mining tenements – had whittled down the number of land tax payers. ”A fairer land tax system would significantly reduce the red-tape cost in WA for property owners and businesses paying rent and level the playing field,” it said.