The South Australian government seemed unfazed by the critics of its crackdown on land tax aggregation, which would prevent owners from splitting properties under different names and trusts to lower their duties.
State treasurer Rob Lucas announced that the government would push through with the changes on land tax aggregation, as well as the cut on the top land tax rate from 3.7% to 2.4% starting July next year.
During the state budget process in June, the government announced that it would cut the tax rate for property portfolios worth $1.3m to $5m, with lower discounts for those with properties over $5m.
The plan to prevent land tax aggregation is expected to offset the losses the government would incur with the lower rates.
"We're going to stop the situation where someone can own $3m or $4m in property and not pay a single cent in land tax because they structure themselves into a complex series of trusts or companies," Lucas told ABC News.
While investor groups welcomed the reduction in tax rates, they still opposed the changes to land tax aggregation.
"If aggregation is still part of the plan, it's not a plan that we support because it's incomplete and underdone. Given the government now accepts its $40m revenue forecast was inaccurate, how can any investor — big or small — trust the latest figures and calculations," Property Council SA executive director Daniel Gannon told ABC News.
Based on Property Council's estimates, the changes to land aggregation would increase the revenue of the state by $100m a year. Gannon said the changes could substantially increase the land tax bills of property investors.
"The property sector will continue to fight for a fair go on behalf of mum and dad but also institutional property investors. The last thing we want to see is a destructive change like this take place, particularly in an established market," he said.
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