Controversial land tax change stays in SA
The South Australian government will move to slash land tax rates but is sticking with a controversial move to close a loophole that could hit some large property investors.
After announcing its reforms in the state budget in June, the government has been considering feedback, including some strong criticism, from community and business groups as well as reviewing the impact of its proposed changes.
It will now cut the top marginal tax rate from 3.7 per cent, the highest in the nation, to 2.4 per cent, the average of all the states, with the lower rate to take effect from July next year.
But Treasurer Rob Lucas said the decision to stop some people or businesses with multiple properties from paying essentially no tax by using trusts and other ownership structures would stay.
On budget day the government said the move would raise about $40 million.
It now concedes that figure was wrong and the tax take would be $86 million, even with the lower tax rates.
But Mr Lucas said the government total land tax take would still fall by $70 million over the next three years.
"The vast majority of mum and dad investors, and company groups, who currently pay land tax will be financially better off as a result of the government's reforms," the treasurer said on Monday.
However, Mr Lucas said the changes affecting those with multiple properties would stay and were consistent with the rules applying in both NSW and Victoria.
It was clearly unfair that someone could own $2-3 million in properties and yet not pay a single dollar in land tax, the government said.
The Property Council has been leading against the new tax aggregation rules and said while the cut in tax rates was welcome, it would still not support the overall package.
"If aggregation is still part of the plan, it's not a plan that we support because it's incomplete and underdone," executive director Daniel Gannon said.
"Given the government now accepts its $40 million revenue forecast was inaccurate, how can any investor, big or small, trust the latest figures and calculations?"
