Land-tax loophole goes Article from: CAMERON ENGLAND, CHIEF BUSINESS REPORTER June 09, 2007 02:15am PROPERTY investors with multiple properties will no longer be able to dodge land tax by splitting their ownership. A loophole in the land tax laws has allowed people to split the ownership between, for example, themselves and a company they own to avoid paying the appropriate level of tax. A spokeswoman for Treasurer Kevin Foley said about 1700 people could be affected by the crackdown on the loophole. The State Budget handed down on Thursday provides $5 million in 2008-09 rising to $5.5 million in 2010-11 for tightening compliance with the land tax laws. Mr Foley said there had been complaints that some companies were structuring their business to avoid land tax liabilities. "Some owners of multiple land holdings have avoided paying higher marginal rates of land tax by holding land in the name of apparently different ownerships involving minority interests," the Budget papers say. "Holders of the minor interest are often relatives of the original owner and, in some cases, may be a related company or trust. "By engaging in this practice, the land tax aggregation provisions are circumvented with each apparent ownership benefiting from the land tax threshold and possibly a lower rate of land tax than would apply to an aggregated land holding. "To counter this, additional anti-avoidance provisions will be inserted into the Land Tax Act 1936." The measure is expected to increase land tax revenue by $5 million in 2008-09 increasing to $5.5 million by 2010-11. Adelaide taxation lawyer Andrew Baggio said: "The way land tax works is that land holdings are aggregated if you have the same owners. If you have for example 'person A' who owns four or five properties, assuming none of them were farmland or your own home, they would all be aggregated and their values put together, and because it's a sliding-scale tax it gets the values up there. "What people were doing was person A would hold 95 per cent, then they'd put someone else on the title holding 5 per cent or even less than 5 per cent." Mr Baggio said because RevenueSA did not look at the proportion of ownership when calculating land tax, but just the identity of the owners on the title, this method helped reduce the land tax paid.
Hehe ... my wife's aunt was telling me about this loophole just a couple of weeks ago ... she's going to be annoyed that they've closed it !
