Land Tax NSW – Have you registered? Will you pay a surcharge?

If you own or jointly hold a property in NSW that is not your principal place of residence – that is, your home – on 31 December in any year, then you may be liable to pay land tax to Revenue NSW. Land tax is payable on the total taxable value of your land exceeding the General threshold of $734,000 in 2020 and of $755,000 in 2021. You do not have to be earning income from a property to be liable for land tax.

Land Tax

You do not need to receive a Notice of Assessment for land tax before registering. If you are liable for land tax and do not register, you may incur interest and/or penalties. To engage YML to register you for land tax with Revenue NSW, go to https://app.hellosign.com/s/6iABAMQh

When is it required?

Land tax is levied on NSW landowners at midnight (12am) on 31 December of each year and is payable on land values exceeding the General or Premium thresholds:

General threshold for 2021 – $755,000

Premium threshold for 2021 – $4,616,000

How much is it?

The Valuer General imparts Revenue NSW with land values which are determined on 1 July each year. Your unimproved land’s value is taken and thereon a calculation using the relevant NSW land tax rate is made to work out your land tax amount.

Land tax on a property’s value over the General threshold amount is $100 plus 1.6 per cent of land value above the threshold and up to the Premium threshold.

Land tax on a property’s value over the Premium threshold is $61,876 plus 2.0 per cent of land value above the threshold.

Is your registration correct?

It is important to register your land ownership status accurately. A correct registration can avoid errors in your Notice of Assessment.

If you move out of your home and lease it, you may no longer claim a residence exemption, so make sure your registration details are updated. You might also consider clarifying the type of trust in which your land is held; declaring company group structures accurately; and, declaring foreign person status if applicable.

Should there be an error in your Notice of Assessment, you may lodge an application for a reassessment or, if necessary, lodge an objection.

SURCHARGE Land Tax

You may be liable to pay a surcharge on residential property you own if your discretionary trust holding the property is deemed a ‘foreign person’.

When is it required?

Residential property and/or land held in trust wherein any person is deemed to be ‘foreign’ – a trustee ‘not ordinarily resident in Australia’ – and who holds a ‘substantial interest’ of 20% or more, including beneficiaries of a trust* – means the trust is liable to pay a surcharge land tax.

* For a full definition of ‘foreign person’, see https://www.revenue.nsw.gov.au/help-centre/resources-library/g009

How much is it?

Two surcharges are payable by a ‘foreign person’ owning a residential property in NSW:

1. Surcharge Purchaser Duty – currently 8% of the market value of the residential property – payable once upon acquisition.


2. Surcharge Land Tax – currently 2% of the unimproved value of the residential land – payable annually on such land owned as at 31 December each year.

How to avoid it? – Deed of Variation

Where it is the case that a trust deed includes a ‘foreign person’, a trust may be varied by drawing up a Deed of Variation to exclude any foreign party from benefiting from a trust. You might like to consider your trust deed this year but remember to amend it prior to 31 December 2021.

Consult YML Group for an assessment of the ‘foreign’ status of your trust. A Deed of Variation may be used – going forward – to reduce and/or exempt your trust’s surcharge liabilities.

To engage YML to create a Deed of Variation – NSW Surcharge Land Tax – Already Registered for Land Tax, go to https://app.hellosign.com/s/Lb65Fdsq

To engage YML to create a Deed of Variation – NSW Surcharge Land Tax – Not yet Registered for Land Tax, go to https://app.hellosign.com/s/6TVJ3h6w

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your land tax. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.