How companies are assessed for land tax
Understand how companies and related companies are assessed for land tax in NSW, what thresholds apply and when a company may be liable for surcharge land tax.
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Companies
For land tax purposes, a company includes all bodies or associations, corporate or unincorporated.
Companies receive the benefit of the land tax threshold. They are liable for land tax when the total taxable value of all the land they own in NSW, is above the land tax threshold.
The taxable value of your land is based on the annual land valuation determined by the NSW Valuer-General.
Land owned by companies may be eligible for a land tax exemption depending on how the land is used.
Related companies
A company is related if:
- it controls the composition of the board of directors of the other company
- one or more people own more than half the voting shares in two or more companies, or
- a person and a company, in which they are shareholders together, have a controlling interest in another company.
When assessing related companies, the concessional company receives the benefit of the land tax threshold and each other company (non-concessional) is assessed without the land tax threshold.
Where the concessional or joint concessional companies’ land value exceeds the premium rate threshold, the land value of each non-concessional company is assessed at 2% of the taxable value.
Where the land value does not exceed the premium rate threshold, but exceeds the general threshold, the land value of each non-concessional company is assessed at 1.6% of the taxable value.
Additional information can be found in Revenue Ruling LT003v2 – Related Companies.
Companies acting as a trustee
If a company is acting as a trustee, there may be land tax liability.
Trusts are assessed as a separate entity. You must register your trust and provide the deed in which the trust is structured.
Read more information about Trusts, or watch our video series on trusts to find out more.
When is a company liable for foreign owner surcharge?
A company is liable for surcharge land tax when it has been identified as a foreign corporation.
A company is foreign when it satisfies two conditions:
- an individual or set of individuals hold a substantial interest in the company, and
- those individuals are not ordinarily resident of Australia.
The term “individual” here is referring to the shareholders of the company, not the directors.
A person or set of persons hold a “substantial interest” in the company when:
- a person alone has an interest of at least 20% in the company, or
- two or more persons together hold an aggregate interest of at least 40% in the corporation.
Additional information can be found in Revenue Ruling G009 - foreign corporations.
Calculation examples for companies
Below are examples of how land tax is calculated for concessional and non-concessional companies.
Company A is the concessional company and receives the threshold.
Company B is a non-concessional company and does not receive the threshold.
Landowner | ABC Pty Ltd |
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Property ownership | Property A ABC Pty Ltd owns 100% Land value = $1,200,000 |
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Calculation | $1,200,000 (total land value) - $1,075,000 (general land tax threshold) x 1.6% + $100 (general land tax rate) = $2,100
Note: A premium land tax marginal rate of 2% applies where the combined total taxable land values for the related companies is above $6,571,000. |
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Land tax payable | $2,100 |
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Landowner | ABC Pty Ltd |
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Property ownership | Property B ABC Pty Ltd owns 100% Land value = $600,000 |
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Calculation | $600,000 (total land value) x $1.6% (general land tax rate) = $9,600
Note: A premium land tax marginal rate of 2% applies where the combined total taxable land values for the related companies is above $6,571,000. |
|---|
Land tax payable | $9,600 |
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Contact the land tax team
If you have a question about land tax contact us.
