From the 2020-21 financial year, related corporations that own land can be jointly assessed for land tax as if the land was owned by one corporation.
How are corporations grouped for land tax purposes?
Corporations will be considered to be related to each other for land tax purposes when:
- control is exercised by a corporation over another/other corporations;
- control is exercised by the same person(s) over two or more corporations;
- control is exercised jointly by a corporation and its shareholders, who between them own more than 50% of issued share capital, over another corporation;
- a corporation owns more than 50% of the beneficial interests/units in land subject to a fixed trust/unit trust; or
- where 2 corporations are related, a third corporation will be grouped if it is related to at least one of them.
Can more than 2 corporations be related?
Yes. Where one corporation is related to another which is, in turn, related to a third corporation, all the corporations are related. This is because the first and third corporations are related to a mutually-related corporation.
This same reasoning, where corporations are linked by sharing a mutually-related corporation, is applied to relate a fourth corporation, and any subsequent corporations.
My corporations meet the definition of “related”, but do not all own land in South Australia. What does this mean for land tax?
Corporations may be related in any of the ways outlined, even if they do not all own land in South Australia.
Therefore, 2 corporations that own land in South Australia are grouped with each other if they are related to a third corporation that does not own land in South Australia.
How are related corporations assessed for land tax?
Where 2 or more corporations are related, the land they own will be assessed for land tax as if the land was owned by one corporation.
What is a Corporation Group Head?
The Corporation Group Head is the corporation who will receive correspondence from RevenueSA on behalf of the whole group of corporations. They are also responsible for updating and confirming the corporations they are related to with RevenueSA.
The related corporation most recently incorporated that owns land in South Australia, was set by default as the Corporate Group Head for the group. The corporate group could update their Corporate Group Head in the RevenueSA Online Land Tax Portal.
This Corporate Group Head will receive the Land Tax Assessment for the related Corporate Group.
The other corporations in the group may also receive Land Tax Assessments for other land they own.
Who will receive the Notice of Land Tax Assessment?
Where related corporations are jointly assessed for land tax, one Land Tax Assessment is issued for the group and will be sent to the Corporation Group Head.
The Land Tax Assessment will specify each land owning related corporation, the land owned by the related corporations and the percentage interest each corporation has in the land taxed.
Corporations which are members of a corporate group who are already registered for RevenueSA Online may log into RevenueSA Online to view the corporate group’s Land Tax Assessment.
Corporations who have not previously registered with RevenueSA Online should register using the registration ID provided to them earlier this year. If you do not know your registration ID, email firstname.lastname@example.org with your ownership number so your registration ID can be provided. You can then register to use RevenueSA Online to then access the corporate group’s Land Tax Assessment.
Can land tax be distributed between the related corporations?
Land tax levied should be distributed between the related corporations based on the value of each of the related corporations’ land holding interests.
If the land tax is paid by the Corporation Group Head or another related corporation, they are entitled to recover a proportionate amount of the land tax from each of the related corporations based on the value of each of the related corporations’ land holding interests.
What if land is jointly owned with a natural person or a corporation that is not related?
The land will firstly be assessed in the joint ownership and a Land Tax Assessment issued if the land is liable to land tax.
The related corporation’s share of the jointly owned land will then be combined with the site values of the related corporation group’s other land. Land tax is then calculated. The Land Tax Assessment will show the percentage interest in the land and include a deduction of any land tax assessed in the joint ownership (if applicable).
For more information see the how is land tax assessed page
Can corporations be de-grouped where they hold land for the purposes of a residential development?
Corporations are able to apply to be de-grouped where they hold land for the purposes of a residential development of more than 10 allotments or lots.
This will apply for a period based on the expected development period, but will not exceed an initial period of more than 5 years.
The development must also commence within 2 years of the grant of the application, or a longer period determined by the Commissioner of State Taxation.
Land held on trust
What happens when corporations are controlled by the same trustee for different trusts?
If a trustee holds a controlling interest in any corporations on behalf of different trusts, the corporations are not related as a result of the controlling interest.
For further information, please refer to the Guide to Legislation: Land Tax changes for Joint Owners, Land Held on Trust & Related Corporations.
What if the corporation owns land as trustee of a trust?
Where a corporation is the owner of land as trustee of a trust (other than a trust arising because of a contract to purchase or acquire an estate or interest in the land), the trustee will be assessed for land tax on the whole of the land subject to the trust as if the land were the only land owned by the trustee.
This means that where the land is held on trust, the taxable value of that land:
- is aggregated with the taxable value of other land subject to the same trust; but
- not with other land owned by the same taxpayer that is not subject to the same trust.
Land owned by a corporation as trustee of a trust is liable for land tax at the trust rates and is subject to the trust provisions, except in specified circumstances.
For further information, please refer to the Guide to Legislation: Land Tax changes for Joint Owners, Land Held on Trust & Related Corporations.Trusts do not include trusts set up for the purchase/sale of a home.
What if a corporation is also a beneficiary or unit holder of a trust?
Where a corporation owns land and is a beneficiary/unitholder of a fixed or unit trust (and so is treated as an owner of the land on trust for land tax purposes) and the corporation is also related to another corporation which owns land, the corporations will be assessed jointly for land tax purposes.
If the trustee of the trust notifies of the beneficial interest/unitholdings, the trustee may be assessed at general land tax rates, rather than trust land tax rates. The corporation which is a beneficiary/unitholder will be considered the owner of the trust land.
For further information on nomination of beneficiaries/unitholders and ownership, please refer to the Guide to Legislation: Land Tax changes for Joint Owners, Land Held on Trust & Related Corporations.
As the corporations are related, the land owned by the 2 related corporations are jointly assessed for land tax as if it were owned by a single corporation. This will include the land held on trust.
In this situation, both corporations would be equally responsible for ensuring the full amount of land tax is paid.
Trusts do not include trusts set up for the purchase/sale of a home.
What if I am trustee of shares in a corporation on behalf of a beneficiary?
In relation to fixed trusts only (for example, bare trusts), a trustee and a beneficiary of the fixed trust are taken to hold the shares (or exercise power over a corporation) equally.
This is not the case for trustees and beneficiaries of discretionary trusts and trustees and unitholders for unit trusts.
Trusts do not include trusts set up for the purchase/sale of a home.
When contacting us please provide your ownership number and assessment number. You can find these numbers on your Land Tax Assessment (previously known as a Notice of Land Tax Assessment).
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