Vital Business Data (Issue 15)
Land tax review
The Land Tax (Amendment) Act 2004 came into effect on 28th April, 2004. There are two important changes. The good news is the land tax rate has not been increased for this coming year, and hopefully reduced for the tax year of 2005.
The amount of land tax for the year 2004 has been changed only marginally.
The threshold tax level has seen a rise from $125,000 to $150,000 for the minimum unimproved value on which land tax is assessed but thereafter there has been no change in the steeply escalating rate of tax which concludes at the rate of 5% for accumulated site values over $2,700,000. In other words, a parcel of land with a site value of $2,700,000 will attract land tax at $54,880. If your land holding has an unimproved value of $4,700,000 your tax will be $154,880 for the year 2004. Take a guess on what your tax may be if you are a reasonably large manufacturer or supplier with land holdings in the industrial areas of Altona or Campbellfield.
When is a reduction NOT?
The Victorian State Government has announced that the indexing of the unimproved values has been removed for the year 2004.
The recent 2004 General Information Sheets quote. There is one, (1) change to the land tax for the 2004 assessment year.
There will be no indexation factors used for the 2004 land tax assessments. For 2004, the total unimproved value for land tax will be the same as the 2002 general revaluation…
This is a misleading and dishonest statement. Historically there was never going to be any indexation for the 2004 year. The Land Tax Department intended to use the Site Values produced by the Municipalities as at 2002. Why is it Governments want to be transparent, but are dishonest at the same time?
Your last land tax bill was calculated on values estimated as at January, 2000. Consequently, the enormous increases in land values between 2000 and 2002 will be introduced into your 2004 Land Tax Assessment. It is likely, if you have not already received your land tax for 2004, that you will be unpleasantly surprised when it arrives.
In addition, your 2005 Land Tax Assessment will be indexed by a percentage with a relationship to the movement in land values between 2002 and 2004. This could be another most unpleasant surprise.
Rates of Scale
The State Government has made amendments to the scale of land tax for the year 2005. This was introduced in the recent State Budget and will increase the minimum value for land tax to a Site Value of $175,000 (from $150,000), and will reduce the top rate in the dollar from 5% to 4%.
The above figures are still considerably higher than in other Australian States.
The Budget figures show revenue from land tax for the 2003 as $768,000,000. The anticipated revenue for the year 2004 is $916,500,000, representing an increase of approximately 19.33% per annum – a good increase in anybody’s language. If only you could do that to your tonnage rates.
The future
A reading of the Budget indicates the upper levels of Land Tax will reduce from 5% to 4% in 2005 and with a further reduction to 3.5% in years 2006 and 2007 and then again to 3% in the years 2008 and 2009. If you had a suspicious mind it would be interesting to calculate the actual differences in Land Tax when the very large increases in land values are taken into consideration over the next few years.
Recommendation
I recommend that all Municipal Rate Notices be closely reviewed. The definition of Site Value is extremely artificial and all assessments should be investigated by the rate payer. You only have two months from the receipt of the Rate Notice to lodge an objection to the valuation assessments, and you cannot lodge an objection to the Land Tax Assessment. Land tax uses the Municipal rating valuations and it is to the Municipality that all objections to the value of land must be directed.
There is a two year difference between the Municipal valuations and the use of those valuations for Land Tax, and there is every chance a rate payer will lose his right to object to appeal, if the objection is not made to the Municipality within the correct time frame.
Power companies, such as those that superseded the State Electricity Commission, will now be subject to Land Tax on their transmission line easements. This is likely to raise interesting valuation problems, but my reading of the Act is that it is not intended to affect land owners over which the easement lines may run. On the other hand, an additional tax on the power supply companies could lead to an increase in costs to the consumer.
It might be asked as to why only the power supply companies. Why not Land Tax on easements held by the Water Boards and the providers of gas and petroleum which are represented by the multinational. On the surface this seems to be a very tight squeeze by the State Government for additional tax income.
I am available at any time if members of the CMPA wish to discuss rates and land tax problems.
Robin H. Hocking
TRANSPORT WORKERS AWARD UPDATE
Members are advised that as of the 16th April 2004, the Australian Industrial Relations Commission has varied the award by including new provisions in clause 10 concerning Dispute Resolution Training Leave.
Members are advised that as of the 1st May 2004, the AIRC has varied the award by including a new dangerous goods allowance in clause 19 items Q & R.
EMPLOYER FINED FOR NOT NOTIFYING AN INCIDENT
Recently, a Victorian employer was fined $5,000 plus costs for failing to notify the Victorian WorkCover Authority of a notifiable incident.
Under the OH&S (Incident Notification) Regs, employers are required to notify the Authority immediately of certain injuries, illnesses and incidents. It is critical that employers have systems in place to ensure this occurs in a timely manner.
Employer Compensation Management Services, March 2004
Work Authority holders must report directly to the DPI.
Hidden liabilities
Always check the depth of ownership on land you are extracting from. Some properties are only owned to a depth of 15m (50 feet). Material extracted from below that depth on these properties belongs to the Crown (Government). A royalty currently 87c/tonne must be paid on all material sold from below that depth.
Always check on your leases over such land as you may have to pay royalty twice. Ie: to the Government and to the landowner.
You must be logged in to post a comment Login