Extension for land taxpayers to designate a trust beneficiary

South Australian land-owning trustees of discretionary trusts will be granted a 12-month extension in which to nominate a designated beneficiary for pre-existing trust land under proposed changes to the Land Tax Act 1936.

The Land Tax (Discretionary Trusts) Amendment Bill 2021, introduced to State Parliament this week, will give trustees significant additional time to consider their land holding arrangements to make a decision that best suits their individual circumstances.

Treasurer Rob Lucas said the deadline for nominating a designated beneficiary for pre-existing trust land (being land subject to the trust as at midnight 16 October 2019, which followed the land tax reform legislation being introduced into Parliament) would be extended from 30 June this year to 30 June 2022.

“Given the often extremely complex land holding ownership structures and trust arrangements for some SA land taxpayers, and system complexity in general, there are still a significant number of ownerships yet to receive their land tax assessments for this financial year.

“I am advised that RevenueSA has received a number of enquiries from taxpayers relating to the delay in receiving their assessment, noting the importance of receiving this information to assist in deciding whether or not to nominate a beneficiary before the deadline.

“These changes will address that and alleviate these concerns.”

Under the change, a trustee of a discretionary trust will now have up to 30 June 2022 to nominate a designated beneficiary for pre-existing trust land and that nomination can also apply to their 2020-21 land tax assessment and future years.

Where a nomination is made, the trustee is taxed at the lower general rates of land tax, rather than the higher trust land tax rates.

In other proposed changes, the Valuation of Land Act 1971 will be amended to allow an objection to the 2020-21 site value to occur within 60 days after the service of the 2020-21 land tax assessment, even if that assessment is issued in the 2021-22 financial year and the site value it relates to is no longer in force.

Given the significant complexity of the tax arrangements of a number of land owners, there are approximately 13,500 land owners who have not yet received a tax bill for 2020-21. However, not all of these will necessarily end up receiving a bill following their land tax assessment by Revenue SA.

It may well be that they are under the threshold and won’t receive a bill. Some of these people will also be eligible for the 100% relief on the increase in land tax above $2,500 (and below $102,500) due to aggregation changes in 2020-21.

To ensure correct taxation rates and calculations occur and the right thresholds are applied a complex set of business rules are in place together with landowners supplying all relevant documentation, for example;

A landowner with over 400 corporate entities which are in one group because all of the entities are related has more than 250 entities which are land holding, in addition to land held on trust and land held in joint ownerships within the same group.

Until the analysis and processing of all of the above had been undertaken no invoices were able to be issued to the companies or natural persons linked to this group.

The State Government’s historic land tax reforms, which came into effect in July last year, deliver more than $200 million in total land tax savings over three years.

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