2009–10 Land tax changes

New surcharge

A surcharge of 0.5% will apply to all landholders with a taxable value of more than $5,000,000. The surcharge will only apply to the amount over $5,000,000.

See current land tax rates.

Increased fee for land tax clearance applications

The fee for a land tax clearance application has been increased as follows:

• $25.15—applications lodged electronically with an online service provider (not including the provider's delivery fee)
• $31.10—applications lodged with us. 

Unpaid tax interest (UTI)

UTI will now replace late payment interest and will accrue weekly at the annual rate of 11.14%.

Penalty tax

You may be charged penalty tax of up to 75% or more under certain circumstances (e.g. where we have to raise a default assessment because you have not advised us of land you own which was not listed on your assessment notice).

Changes to exemption/deduction requirements

You must now advise us if an exemption or deduction no longer applies. If you do not advise us, we may penalise you.

Principal place of residence (PPR) exemption/deduction extension

You can now continue to receive a PPR exemption/deduction if you are required to vacate your home to seek residential care.

The PPR exemption/deduction has also been extended to allow further splitting of subdivided land in certain circumstances.

Payment allocation

Any land tax payment you make will be used to pay for any outstanding penalty tax and UTI before paying for the outstanding land tax. 

Payment due date

In the past, assessments issued progressively to taxpayers over a period of months. In 2009, most assessments will issue on the same day.

We have extended the payment date for initial land tax assessments from 28 to 90 days. This extended period will not apply to any subsequent reassessment.

Garnishee notices

A garnishee notice for the recovery of outstanding land tax will replace the previous Declaration of Agent notice. We will send a copy of the garnishee notice to the taxpayer.

Land Court appeals

An appeal against a land tax assessment can only begin if a taxpayer is dissatisfied with the Commissioner's decision on an objection. Transitional provisions apply.

Passing land tax on to tenants

The Land Tax Act 1915 no longer prohibits the passing on of land tax to tenants. However, the Residential Tenancies Act 1994 and the Retail Shop Leases Act 1994 still prohibit this practice.

Landlords and tenants signing leases not covered by the Residential Tenancies Act or the Retail Shop Leases Act are free to negotiate who will pay land tax.

How does it affect land tax?

The Premier announced a freeze on land valuations on 12 February 2009.  For most people, the unimproved value of their land remains unchanged—it’s the same as in 2008.

The Department of Environment and Resource Management determines land valuations. For information about the freeze, see their website.

Generally, land tax is calculated on the averaged unimproved value over the last three years (if the parcel of land has existed for all of that time). This smooths out short-term fluctuations and lessens the impact of steeply rising values in real estate booms.

This has significantly reduced land tax assessments in recent years. Though your 2009 assessment may be higher than 2008, averaging continues to reduce tax, as the averaged value for most assessments is lower than the 2009 unimproved value.

A typical example for an individual is shown below.

Year	Unimproved value	Land tax if based on unimproved value	Averaged value	Actual land tax	Saving
2007	$700,000	$1,900	$550,000	Nil	$1,900
2008	$850,000	$3,000	$745,000	$1,950	$1,050
2009	$850,000	$3,000	$800,000	$2,500	$500