Written by Elias Farah, Principal Partner

The South Australian State Government announced on 18 June 2019 that measures would be taken to help close and prevent “loopholes” that exist which enable owners of multiple properties to pay less land tax.

Put simply, the intention of the State Government is to aggregate (i.e. group) land held by common owners and beneficiaries regardless of who actually owns the land (i.e. the legal entity).

This article is intended to assist readers to better understand the proposed measures, will consider what the pending draft legislation may look like, and how such a change may affect the South Australian real estate market.


For the past two months, there has been much discussion, speculation and, in some cases, resentment in our local real estate market in relation to the State Government’s proposal.

At the present point, land tax is assessed for the most part based on the concept that each legal entity is assessed separately from other land that may be owned by the same or related entities or persons.

So for example, that means land owned wholly owned in your name is assessed separate to land owned in the joint names of you and your partner (or another person), and again is assessed separate to land owned in a company that you may control or be a shareholder in, and again is assessed separate to a family trust or unit trust that you may hold a beneficial or fixed interest in.

The reason why separate assessment is important, as opposed to grouped assessments (better known as “multiple holdings”), is because the rate of land tax applied varies and increases substantially the higher the value of total land holdings you have in an assessment. This is illustrated later within the article.

It should be noted that utilising these separate assessments, disregarding anti-avoidance laws for the time being, is not illegal and is in fact clearly outlined by RevenueSA on their website. Naturally this creates incentive for landowners to utilise different entities (and mixes of entities) when deciding to buy new properties, and this has developed as a common practice for some time now, to reduce one’s land tax assessments and increase net cashflows from property ownership.

This is essentially the “loophole” that the State Government now wish to close, and concern of stakeholders revolves around a real estate market which fears it will be stung, overnight, by an unbearable and uncommercial rise in land tax costs.

This is a significant policy change and the lack of consultation has added to the concerns of those affected by the proposal..


The State Government says that it wants to facilitate competitiveness within the tax system, ensuring equity amongst taxpayers, intending to supplement, correct, and control the law by being fair and impartial.

They consider that closing these “loopholes” in land tax does just that.

Importantly, the State Government’s land tax reform proposal is part of a wider State Budget proposal having to respond to an estimated loss of $2.1 billion in GST revenues.

They estimate that the aggregation measures will raise approximately $120 million over the first three years, with some $40 million of additional revenue expected to go directly into the State Government coffers in the first year.

In considering these figures, it has been widely speculated that the State Government has significantly underestimated the additional land tax revenue, some saying it could actually be in excess of $100 million per year.


The proposed changes are detailed in the 2019-20 South Australian Budget that was recently released on 18 June 2019.  The State Budget papers are available for download at

For those who wish to obtain greater insight and detail on the proposed measures, we direct you to pages 8-9 of the Budget Speech, pages 42-43 and page 168 of the Budget Statement, and pages 4-6 of the Budget Measures Statement.


Outside of the State Budget papers, there has not been a great deal of information provided regarding how exactly the aggregation and surcharge measures will be implemented.  At the time of writing this article, the draft legislation had not yet been distributed for comment by industry stakeholders.

On the current available information, the changes are likely to cover:

  • Legal changes introduced that allow various related entities to be grouped together for land tax purposes;
  • Properties will be aggregated based on a land owner’s interest in every piece of land they hold rather than only aggregating properties held in the same ownership structure;
  • RevenueSA will receive further authority and standards to determine the “true owner” of every parcel of land regardless of whether they are acting together or have a controlling interest; and
  • An additional surcharge rate will be charged on land owned in trusts where the trust beneficiaries are not disclosed or identified.

Aggregation standards will identify the “true” multiple holdings for each individual owner, be it land held in sole name, joint names, in companies or in fixed interest trusts.

In those cases where individual owners cannot be effectively identified, such as a discretionary family trust, it is proposed that they would have to pay a “surcharge”, being an additional rate of land tax, effectively dissuading anyone from trying to avoid grouping.

These reforms will effectively group properties with to the extent a common ownership can be identified, and will diminish incentives to own properties in other entities (such as trusts) if there is no other substantive benefit other than the minimisation of land tax.

Although the draft legislation remains a work-in-progress, the proposed measures are likely to be like those reforms previously introduced in New South Wales and Victoria (Victoria being the first State to introduce land tax aggregation laws).


Below is a comparison between the relevant aggregation land tax laws of New South Wales and Victoria, and the writer’s impression on what may be introduced  in South Australia.


As illustrated above, assuming the State Government do not introduce additional surcharge land tax for land values of say $5 million, the land tax payable by a South Australian landowner from 1 July 2020 will be some $35,928 and $50,569 higher than the equivalent landowner in Victoria or NSW.

These calculations already factor in the approved reduction that commences from 1 July 2020, whereas now the difference is much higher, being some $65,454 to $80,454.

The existing framework and significantly higher land tax payable by South Australian landowners explains why many have strived to separate their landholdings as separate assessments where possible. 

With a national average top marginal land tax rate of 1.92% across all States and Territories (excluding NT which has none), our current top rate of 3.7% provides a significant issue for the State Government and landowners to overcome.  Needless to say, the proposed reduction to 2.9% by 2027 is not likely to be enough.

Of further importance is the State’s current “Revaluation Initiative” whereby the Valuer-General has been provided with funding and mandate to comprehensively review the market value of all land in SA for rating purposes.  The first cycle of this revaluation commenced in FY2020 across three Council areas (Walkerville, Unley and Adelaide Plains) and will continue to expand into other Council areas over the coming 1-2 years.

This revaluation towards market rates presents its own issue for landowners, as it will doubtless lead to higher valuations and rate assessments as well as disputes around true market values.  The proposed land tax aggregation laws overlapping with this revaluation initiative presents further challenges and costs for landowners to grasp.


To effect the proposed changes, the State Government will make amendments to the Land Tax Act 1936 (Act), which if passed, will come into effect on 1 July 2020. There is no draft legislation in circulation yet.

It has been said that the draft legislation is likely to be circulated at some point in September 2019, and that it will be provided to key industry stakeholders for comment.  There is no indication of how long this consultation period may be or when the Bill is expected to be introduced to Parliament.

The measures are not universally popular even within the State Government MPs.  The opposition Labor Party have not taken an official position to support or oppose the proposed land tax aggregation measures.


For the time being, it is clear that the proposed land tax aggregation measures present significant concern to the South Australian real estate industry.

Concerned stakeholders include families that have accumulated a modest portfolio of investment properties, large property owners, and businesses that provide professional services to the real estate industry.

It is possible that the draft legislation and consultation period when introduced will alleviate some concerns, depending on the cost implications to landowners.

it is also possible that the proposed aggregation laws will not pass in light of an overwhelming opposition of stakeholder and consumer groups, and the Liberal Government will have much to consider.

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