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Understanding Land Tax Timing

One of the most important things to understand is that land tax is only deductible in the financial year to which it relates—not the year it’s actually paid. This means that if you’ve missed claiming it in prior years, you may have lost the opportunity to do so, especially if the amendment period for your tax return has passed.

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While previous ATO guidance (such as ID 2010/192, now withdrawn) confirmed this position, the underlying principle still applies: timing matters.

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A Common Trap: “I Didn’t Know I Had to Pay It”

Consider this real-world example: a friend of mine has a trust that owns multiple investment properties in New South Wales. He’s held these properties for a decade but had never registered for land tax or paid it—largely because he wasn’t aware of the obligation.

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This has now created a major issue. When he eventually sells one of these properties, he’ll need a land tax clearance certificate before settlement. That certificate will show outstanding land tax liabilities—possibly amounting to tens of thousands of dollars. While he may be able to claim land tax for the most recent one or two years, any earlier missed deductions are likely lost.

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The financial consequences don’t stop there. Because the trust is the legal owner, the unpaid land tax could affect trust distributions and lead to complications requiring professional rectification—incurring additional accounting or tax agent fees.

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What You Should Do Now

If you own property—whether individually or through a trust—take the time to check whether you should be registered for land tax in your state or territory. Each jurisdiction has different thresholds and rules, and it’s your responsibility to ensure compliance.

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If you are liable, make sure to:

• Register promptly with your relevant state revenue office
  
  
• Pay land tax as it is assessed
  
  
• Keep accurate records and claim the deduction in the correct financial year
  
  

Trust Holds Property? Chat with Us About Land Tax Before It’s Too Late

Land tax can complicate trust distributions and create problems at sale. If your trust owns property, chat with us now to get on top of your obligations and avoid costly clean-ups later.

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