A recent amendment to the Land Tax Act has abolished “special land tax”. Special land tax was a one off tax charge at the rate of 5% of the unimproved value of the land. The abolition of the tax came into effect from the 16 December 2020.
The tax was previously charged following on the change of use of various listed types of property uses that were exempt from land tax due to the property’s existing use, such as a caravan park use, to a non-exempt land tax use. The tax was imposed when that exempt existing use ceased.
Special land tax was the responsibility of a vendor to pay where a change of use occurred up to 60 days from the date of change of ownership of a property. After the expiration of that date, the liability for payment was with the purchaser.
The Government summary stated that the applicability of special land tax often fell inequitably on some parties. The tax was also seen as a strong disincentive to redevelop land for an efficient purpose.
Caravan parks can continue to apply for and obtain an exemption from land tax in a taxable year. The amendment to the Act will give the result that any change of use of the land from a caravan park use to another use, special land tax will not be payable. Future land tax applicable to the property may be payable going forward depending upon the altered use of the land.
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