Welden & Coluccio Lawyers have previously written about, and personally presented (pre pandemic of course) several seminars for the public concerning the new State Government changes to Land Tax. Those changes caused a huge stir amongst landowners, small time investors, large operators, Accountants and Lawyers when news broke back in late 2019. It seems however that these changes, the largest to Land Tax in this State’s history, have taken a back seat to all things COVID related. Well, time marches on, at the looming deadline of 30 June 2020 for many changes to kick in fast approaches.
If you own land via a company or are a Director of a company that owns land, you would have recently received a letter from Revenue SA demanding you log into the Revenue SA portal and advise them of certain information including but not limited to:
- which other companies are related corporations
- if the land is held in a trust
- if that trust is an exempt entity, and
- whether an individual beneficiary has been nominated by the trust.
The letter includes a nasty RED heading that reads – ACTION REQUIRED BY 3 JUNE 2020. As if things couldn’t get more scary!
A vast array of highly specific (some legal) terms are used with little to no explanation other than to refer you to other sources of information, like previous fact sheets or the core legislation and regulations.
For many, if not most, this will be information overload and simply too difficult to comprehend especially when most of our attention has needed to be fixed elsewhere.
Despite the difficulty in understanding how the new Land Tax scheme operates, it appears that the State Government and Revenue SA have placed absolute responsibility for providing correct and accurate information on each landowner.
Get it wrong and penalties with interest will apply!
Although there are other critical elements of the new legislation that all landowners must be aware of (aggregation, grouping of corporations etc), one of the most important (and least understood) is that of the option of nominating a beneficiary for each discretionary trust which owns land.
The nomination of a beneficiary may result in a lower Land Tax assessment, but please be beware;
1. You can in essence, only get 1 opportunity to make the nomination – if the nomination is withdrawn the trust CANNOT make another nomination – it must be the correct nomination in all the circumstances;
2. If the individual you nominate owns land in their own right, you and they may have inadvertently INCREASED their individual Land Tax assessment;
3. There are strict limitations on who the trustee can actually nominate including, amongst many other things, that they had to have been 18 years of age AS AT 19 OCTOBER 2019. To be very clear, that means that the nominated beneficiary cannnot be 18 years of age at the time you make the nomination but must have been 18 as of October 2019.
It is our strong advice that before you make any nomination of beneficiary or accept any grouping of corporations you first speak to Welden & Coluccio Lawyers to assess your options and whether any existing Land Tax Exemptions might be available to you.
With the new legislation, some exemptions have actually been expanded – so you need to know all of your options and you need to know them now!
All of our lawyers are available to speak to by telephone, video link or even face to face with appropriate social distancing and hygiene measures in place.
Don’t leave it too late, act now.