The Office of State Revenue has issued a number of developers with retrospective land tax assessments for subdivided land previously considered exempt.
Under the Land Tax Act, exemptions or concessions apply to rural land operated as a business, such as a market garden, poultry farm, or nursery.
However, upon subdivision of that land, the current owner becomes liable for up to five years of retrospective land tax, irrespective of whether the current owner has owned the land for that period or not.
One of the affected developers contacted WA Business News and indicated they had not seen the retrospective provisions used before.
“It is ridiculous that whoever subdivides the land can be liable for five years worth of retrospective tax, regardless of how long they have owned the land for,” the developer said.
“The bills will be running into the hundreds of thousands for some developers.”
Another developer claims to have received a bill that has not taken into account the land tax already paid.
In order to lodge an objection, the developer has been told that they need to pay the bill in full and then provide evidence of previous land tax payments in order to then receive a refund.
The Urban Development Institute of Western Australia (UDIA) a month ago issued an alert to members in relation to this provision and are believed to be keeping a log of affected developers.
A spokesman from the Office of State Revenue said the provisions regarding subdivision of rural business land had been in place for a long time and had been consistently applied.
“We are not targeting the land development industry, we administer the act the same way, whether it be in relation to developers or anyone else,” the spokesman said.
“Given that these people deal with the subdivision of land, they are likely to trigger the provision in relation to retrospective tax.”
The spokesman said that tax was attached to land, not to the owner of the land, and that retrospective taxation was consistent with other portions of the act.
