Crown or Council Leases

Land tax is a tax on the total value of land you own, or have an interest in, as at midnight 31 December each year.

There are a number of exemptions available from land tax.

What is a Crown or council lease?

If you lease land from the Crown or council, you may be liable for land tax.

This applies to land owned by:

  • the Crown (that is, the NSW State Government)
  • local councils or county councils
  • NSW statutory and public authorities.

Is my Crown or council lease liable for land tax?

Under certain circumstances, lessees of Crown or council land may be deemed to be the ‘owner’ of the leased land and liable to land tax under section 21C (2) of the Land Tax Management Act 1956.

Leases are not liable for land tax where:

  • the term of the lease is less than 12 months, including any period under an option

  • the lessee is the Crown, a local or county council or a public authority

  • a lease of land for which the Crown is liable for land tax

  • the lease was entered into before 1 January 1987 and the terms of the lease relating to rental payable remain unchanged (for land leased from the Crown only)

  • the lease was entered into before 1 January 1991 and the terms of the lease relating to rental payable remain unchanged (for land leased from local and county councils and NSW public authorities only).

What should you do?

If you lease property from either the Crown or council and you think you may be liable for land tax, you need to lodge a registration form. You can:

How is land tax calculated?

Land tax is calculated on the aggregate value of all taxable land you own or have an interest in, at midnight on 31 December in the year immediately preceding the tax year. This means your land tax assessment is calculated on the combined value of all land you own or have an interest in. However, you will only be liable for land tax if the combined value exceeds the relevant threshold for the applicable tax year. Since the 2008 tax year, the rate of tax is $100 plus 1.6 per cent of the aggregate taxable value which is above the threshold. (From the 2009 tax year, a premium rate threshold was introduced and the rate of tax is 2 per cent on the taxable value thereafter).

Note: Special trusts and non-concessional companies are liable from the first dollar of taxable value. Non-concessional companies are taxed at either 1.6 per cent or 2 per cent of the taxable value depending on the aggregate taxable value of all group members.

Read more about thresholds and rates.

How are the taxable values determined for the land I lease?

Land values for land tax purposes are determined by the Valuer General as at 1 July in the year immediately preceding each tax year.

Where there is a single lessee occupying a property, the land value is determined by the Valuer General.

Where there are multiple lessees occupying a property, the land value of the area you lease may be calculated in accordance with the following formula:

Land value of the area you lease = land value of entire property multiply by (rental value of the area you lease divided by rental value of entire property)

Where it is difficult and impractical to determine the land values through the prescribed methods, the Chief Commisioner of State Revenue can request the Valuer General to determine the land value of the area you lease.

Interest and penalties

Lodging your registration form after the due date or not lodging a form at all is considered a tax default and interest may be charged.

Under the Taxation Administration Act 1996, we may impose penalties for providing misleading and/or false information, or for deliberately avoiding our requests for information.

For more information on land tax, contact us.

Phone
1300 139 816*
8.30am - 5.00pm Monday to Friday
Mail
GPO Box 4269
SYDNEY NSW 2001
Email

Last updated: 23 March 2017