Treasurer Curtis Pitt - mentions creating a Trust title to avoid Absentee Surcharge

TREASURER CURTIS PITT - MENTIONS CREATING A TRUST TITLE TO AVOID THE ABSENTEE SURCHARGE - TOO COSTLY TO CHANGE TO THOSE ALREADY AFFECTED

Queensland Parliament's Revenue Legislation Amendment Bill 2017 contains an explanatory speech made by the then Treasurer Curtis Pitt. 

He explains the possibility to avoid the Absentee Surcharge tax if a company or trust set up was made. Unfortunately it is too little too late after the fact.

Of course this then entails having to pay a transfer duty that would be more than what was originally paid for when the property was originally settled because the transfer fee will be determined on the combined improved value of the land and property appreciation. If you laid down money for renovations, it will cost you more now for spending more!

It appears though that the Land tax Corporate Rate threshold would remain the same. There may also be capital gains tax issues to take into account as well as not entitled to Primary Residence non-CGT exemptions. Legal costs to set up the Trust/Company name as well would be significant.

Overall, one would need to determine whether they are intending to hold the property long-term as an absentee, which may therefore reduce the Absentee tax of 1.5%. But bearing in mind you would still be liable to the non-threshold corporate rate of Land tax that starts at $350,000 and at a higher rate than an individual resident land owner.

If you are struggling to meet land tax & absentee charges and cannot hold long term it seems that the set-up costs versus what the taxes you need to pay - would equal out over a few years time.

The time in that situation to sell would be in a few years when hopefully Land Values have increased but not too significantly so as to at least make a Capital Gain to neutralise the losses, or at worst to make a Capital Loss/overall loss that does not entirely destroy your ability to retire/lifestyle, force you into downward cycle of financial losses.

Wouldn't it have been a skerrick of decency if the Treasurer had allowed concessions for pre-existing owners to have access to transfer to a Trust without cost so that we weren't entirely disadvantaged and financially ruined?

Going a step further in decency and respect for Aussie QLD home owners - reduce the Corporate Rate land Tax threshold that accompanies that tax as well - back to individual land owner status.

Instead, he rants on with a rhetoric of justification to charge absentees which is total BS and any contributions apparently not made by absentees would in no way match what is being charged by the QLD Treasury.  😡

Here is the relevant excerpt of his notes:

"Could an absentee restructure ownership of their land to
avoid paying the surcharge?

• To avoid paying the absentee surcharge, an absentee could
transfer ownership of their land to an existing entity which
they control such as a company or trust. Alternatively, an
absentee could create a trust to hold the land. In both cases,
the absentee would generally incur transfer duty as the
Duties Act 2001 imposes transfer duty on the transfer of land
in Queensland and also on the creation of a trust of dutiable
property. Generally, no exemptions or concessions would be
available to an absentee in these circumstances.

• A person is free to structure their land ownership in the
manner best suiting the purpose for which the land is owned.
Absentees would need to consider their own individual
circumstances and weigh the benefits of minimising their
exposure to the absentee surcharge against the associated
costs, including transfer duty.

• In particular, absentees would need to take into account that,
while land tax is assessed on the unimproved value of the
land, transfer duty is assessed on the greater of the
consideration or unencumbered value which takes into
account improvements on the land. Therefore, for the same
property, the value on which duty is assessed may be higher
than the value on which land tax is assessed and this would
ultimately increase the amount of duty payable."