Land Tax Legal Notice: Payment Overdue - Received after 5 Years (NSW)

LBargainer2017 on 01/02/2017 - 10:17

Dear Ozbargainers,

My parents have a small 2 bedroom unit that that they been renting out for years.

Recently they've received Land Tax Legal Notice: Payment Overdue notice from NSW OSR.
It's over $5k.

The letter issue date is March 2016
The pay due date is April 2016

The letter is written in very threatening language.
It's showing that the assessment has been done in January 2016 and it's attempting to bill my parents for tax and interest on 2011, 2012, 2013, 2014, 2015, 2016.

I believe that it's completely unfair, given that this is the first communication that my parents got from NSW OSR ever.

Has anyone experienced anything like this?
What would you recommend my parents to do?

Financial

Related Stores

osr.nsw.gov.au
osr.nsw.gov.au

Comments

  • oscargamer on 01/02/2017 - 10:25
    +5

    Contact the tax office by phone on the number listed on telstra, not the one on the letter (just in case).

    Talk to them and find out why this is the first they have heard of it…… BUT regardless of this is the first they have heard, the money needs to be paid.

    You might be able to avoid interest charges, if you convince the tax office that they weren't aware of it.

    Be polite, take written notes and listen to your options

  • [Deactivated] on 01/02/2017 - 10:27

    slap it on a couple of credit cards with points and get the benefits

  • [Deactivated] on 01/02/2017 - 10:32
    +6

    its probably a scam

  • derweep on 01/02/2017 - 10:39

    Over here in WA, land tax is payable on investment properties, not too sure what NSW legal requirement is. I own an investment property but it was my previous residential home, so the system didn't flag it for a while until two years later. I had to back pay the land tax from when it became my rental so probably ring the OSR and see what's going on. That's a long way back to get a bill like that, something must have happened in order for the system to flag it.

  • [Deactivated] on 01/02/2017 - 12:58

    Rented properties are probably subject to land tax :( Make sure it's legit but it makes sense. 5k for six years plus interest isn't too bad unfortunately.

  • toniyellow on 01/02/2017 - 13:01
    +2

    I think the onus is on you to register to pay land tax if your investment property is above the threshold amount.

    You must register by the 31 March in the taxing year. If you fail to lodge a return, we may apply interest and penalties to your assessment based on the Taxation Administration Act 1996.

    See http://www.osr.nsw.gov.au/taxes/land

    Apparently the OSR even took out advertisements in major papers after realising many people were failing to register

    http://www.smh.com.au/money/investing/property-investors-war…

    I am not entirely sure that 'they didn't contact us' is going to be an excuse, I would contact them quickly and try and sort it out before the March deadline this year in case you accrue more penalties

  • The Wololo Wombat on 01/02/2017 - 14:12

    As of 2017, landtax in NSW only applies once the value of your LAND exceeds $549,000, then it's 1.6% of the value above this. For a Bill of $5000, (not including interest), the current land value would have to be around the $850,000 mark.

    I can hardly imagine this applying to a 2BDRM unit! (though… if the unit is anywhere near central Sydney..)

    I can see that land tax does not affect a PPOR, so I would assume that this would not be factored in. Is the property's land valued above $549,000? You can see it on utility bills usually? If it's nowhere near $850,000, and it's the only other investment property they own, it's a scam for sure in my opinion!

    • RockyRaccoon on 01/02/2017 - 16:39

      Maybe it is

      For strata units, the land value for each individual strata lot is calculated on a proportional basis, using the unit entitlement for each lot and the aggregate for the strata scheme.

      • The Wololo Wombat on 01/02/2017 - 17:03

        Yes, so let's say the land value of the complex is $4,000,000

        Now there are 1000 lots (is 'lots' the right word?) in the complex, of which 75 lots are assigned to the 2BDRM unit.

        So that's 7.5% of the complex, therefore, land value is $300,000 (7.5% of 4mill).

        Unless the land value is HUGE (inner Sydney) I doubt you'd incur land tax for a 2bdrm unit.

        • kiitos on 08/02/2017 - 00:12

          1000 lots in one $4M piece of land? If in Sydney each lot would literally be a shoebox.

        • The Wololo Wombat on 08/02/2017 - 14:54

          @kiitos: I own a few QLD apartments, for one 3BDRM one I am allocated a total of 82 out of 7000 total. I'm not sure what the word is, so I used 'lots'

        • kiitos on 08/02/2017 - 21:33

          @The Wololo Wombat:
          Ah, OK, I see.

        • djkelly69 on 20/02/2017 - 23:48

          @The Wololo Wombat: it is usually called lot entitlement or unit entitlement.

    • MrBear on 02/02/2017 - 09:26

      But the tax bill is for 5 years worth, not 1 year.

  • Looking4Bargians on 01/02/2017 - 14:12

    SCAM

  • spacemansam on 01/02/2017 - 16:07

    Found this Land Tax scam in 2015 but its via email http://www.osr.nsw.gov.au/info/news/scam-alert-11-march-2015
    Also another news article about it http://www.theleader.com.au/story/2943378/police-warning-wat…

    Not sure if any of it is relevant but I hope everything works out for your parents, $5k is a massive chunk of money in one go!

  • djkelly69 on 01/02/2017 - 17:46
    +1

    Unless they own other investment properties in NSW as well (or the property is owned through a special trust or company which is not entitled to the concession), the land value associated with a small 2br unit is very unlikely to be over the threshold. Note land tax is only based on the actual land value, not the property value.

    As noted above, the threshold is currently $549k and has been around $400k and up for the last 5 years or so.

    Definitely sounds a bit scammy, but hard to know without seeing it.

    Get them to register on the osr.nsw.gov.au website for land tax purposes, and take it from there.

  • adamvlad on 02/02/2017 - 07:54
    -1

    To report tax-related scams the ATO has a dedicated number - 1800 008 540 8am to 6pm Monday to Friday.
    You can also check out the ATO website. It is very clear about scams.

    • tim374 on 02/02/2017 - 13:02
      +1

      OP can ignore this post as the issue is with NSW OSR, not ATO.

  • KintiQ on 13/07/2017 - 19:08

    I believe Land Valuation of NSW is incorrectly recording the land value (as well the Council rate & Land Tax) although the Office of the Valuer General (OVG) of NSW , intends to value the land on its UNIMPROVED condition but infact the valuers are comparing the price of currently sold well developed land , with or without house. A land value rises as soon as the 'DP' subdivision is granted by the council. Hence the UNIMPROVED land value shall be the prorata plot value before the subdivision of the DP.
    OVG needs to redefine the Unimproved land value similar to the UK land value.
    In NSW a person paying 2% Land Tax (1.6% to 2%) of the market value will pay 100% of the land value as tax to NSW GOV within 50 years-HOW FAIR IS TAHAT TAX SYSTEM ?

    Please write to the Joint Committee on the Office of the Valuer General for a fairer land valuation and eventually the council rates and Land Tax.
    Chair: Mr Geoff Provest (Nat, LA Member)
    Deputy Chair: The Hon. Kevin Humphries (Nat, LA Member)
    Members: Mr Stephen Kamper (ALP, LA Member)
    The Hon. Gregory Pearce (Lib, LC Member)
    The Hon. Ernest Wong (ALP, LC Member)

    Mr Geoff Provest MP
    PO Box 6695
    TWEED HEADS SOUTH NSW 2486
    P (07) 5523 4816
    F (07) 5523 4817
    E [email protected]

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