Change your trust to avoid Queensland land tax!

The Land Tax Act 2010 was introduced last year. It will potentially increase the land tax that some owners have to pay even if valuations have decreased! Anyone who has more than one investment property should take care to examine the manner in which their investments are held.

The section of the Act to look out for is Section 20.

Accountants and advisors will sometimes recommend to property investors that they consider holding each investment property in a different trust. One reason for having more than one trust is so that any negative events which affect one investment property do not spill over and produce a negative impact on another property. There are also other reasons why a family may operate more than one trust, including for estate planning. Essentially each property has a distinct and different owner. Although separate trusts may be set up all family members are often listed as potential beneficiaries of each of these trusts.

Section 20 provides that if a trustee, is the trustee of more than one trust and the beneficiaries of each trust, are also the same beneficiaries then land tax is not separately assessed against each property. The value of the properties is combined.

For an investor who owns two properties each valued at $340,000.00 this means potentially paying $7060.00 land tax.

If section 20 did not apply there would be no land tax to pay, as each property valued separately at $340,000.00, falls under the threshold.

The changes that need to be made to avoid paying land tax in this situation are relatively simple and very inexpensive. The most obvious solution may be to appoint a new trustee to one or more of the trusts.

Please contact J J Riba & Co on (07) 54791488 with any questions.

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About jjriba

Joseph Riba is an Australian Business lawyer. Joseph Riba has worked for more than a decade in the franchising industry. He was admitted as a lawyer in Queensland Australia in 1993 and commenced J J Riba and Company Commercial Lawyers in 1998. Between 1999 and 2010 Joseph Riba worked for a National Franchise System known as Bright Eyes. J J Riba and Company have developed structures and systems to help small business owners carry out their plans to expand their business interests using franchising. J J RIba and Company are developing new systems to assist their clients avoid risk and achieve results for small business owners without the expense associated with large firm advice. J J Riba and Company aim to use their knowledge of franchising and business law to provide high level advice at an affordable cost. View all posts by jjriba

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