PEOPLE who have their family homes held by a trust or company will be receiving an annual tax bill from next July.
PEOPLE who have their family homes held by a trust or company will be receiving an annual tax bill from next July.
Those who opted to have their homes held through trusts or companies had to meet stringent criteria to gain the principal place of residence exemption.
In its first budget, the WA Govern-ment made people holding their family homes through such structures ineligible for the exemption, meaning they are now faced with land tax.
The Government claims this measure will net it only $11 million from its first full year of operation.
A spokesman for Treasurer Eric Ripper said it was the Government’s belief that many people held their family homes through companies or trusts for tax benefits.
“We feel they are getting other tax benefits so they shouldn’t be getting the principal place of residence exem-ption,” he said.
However, most tax experts believe the main reason many people hold their homes through a family trust or company structure is for asset protection.
Taxation Institute WA president Graham Cotterill said people who transferred their homes out of these structures to avoid the land tax faced huge stamp duty and possible capital gains tax slugs.
“The Office of State Revenue has conceded that people will be hit hard by this,” he said.
Land tax expert Grahame Young said the implications of the Govern-ment’s new land tax regulations would be more widespread than most people would expect.
“People place their family homes into trusts or companies for a number of reasons. You can’t categorise people as better able to pay because their home is owned through a family trust,” he said.
However, fears of a double dip between the land tax changes and the premium property tax seem unlikely to occur. The premium property tax only hits those homes that are held by owner-occupiers. It does not apply to homes held through a trust or a company.
The Government has raised the land tax rate from 2 per cent to 2.3 per cent for land with an unimproved value of between $2 million and $5 million and from 2.3 per cent to 2.5 per cent for land with an unimproved value of more than $5 million.
Those who opted to have their homes held through trusts or companies had to meet stringent criteria to gain the principal place of residence exemption.
In its first budget, the WA Govern-ment made people holding their family homes through such structures ineligible for the exemption, meaning they are now faced with land tax.
The Government claims this measure will net it only $11 million from its first full year of operation.
A spokesman for Treasurer Eric Ripper said it was the Government’s belief that many people held their family homes through companies or trusts for tax benefits.
“We feel they are getting other tax benefits so they shouldn’t be getting the principal place of residence exem-ption,” he said.
However, most tax experts believe the main reason many people hold their homes through a family trust or company structure is for asset protection.
Taxation Institute WA president Graham Cotterill said people who transferred their homes out of these structures to avoid the land tax faced huge stamp duty and possible capital gains tax slugs.
“The Office of State Revenue has conceded that people will be hit hard by this,” he said.
Land tax expert Grahame Young said the implications of the Govern-ment’s new land tax regulations would be more widespread than most people would expect.
“People place their family homes into trusts or companies for a number of reasons. You can’t categorise people as better able to pay because their home is owned through a family trust,” he said.
However, fears of a double dip between the land tax changes and the premium property tax seem unlikely to occur. The premium property tax only hits those homes that are held by owner-occupiers. It does not apply to homes held through a trust or a company.
The Government has raised the land tax rate from 2 per cent to 2.3 per cent for land with an unimproved value of between $2 million and $5 million and from 2.3 per cent to 2.5 per cent for land with an unimproved value of more than $5 million.
