Australia: Ready, set, object! It’s land tax time again
NSW planning, environment & government update

By Anthony Whealy and Ilona Renner of Gadens Lawyers, Sydney

Your new land tax bill will be arriving soon and you will need to act fast if you want to object.

NSW land tax assessment notices are rolling off the OSR printing press between mid-January and mid-April 2010. With only 60 days to object from the date you receive your land tax assessment notice, landowners, now is the time to give some consideration to the land tax objection and appeal process, to ensure that you're not paying more land tax than you should be.

The assessment notices are beginning to be delivered by the OSR now. It is important to make sure there are proper administration procedures in place to ensure that the notice promptly reaches the appropriate person in your office. Once received, read the notice closely and diarise the objection deadline.

Should I lodge an objection?

You may want to object to the Valuer-General's valuation of your property, as a reduced valuation will lower your land tax liability.

In order to object, you must provide evidence in support of the reasons for your objection based on features specific to your property, and to comparable sales evidence occurring around 1 July 2009. Both the valuation objection form and information on what constitutes good comparable sales evidence is available through the Department of Lands website here. It may be worth engaging a valuation expert to assist in gathering cogent comparable sales evidence.

Deciding whether to object to your land tax assessment doesn't have to be a headache. Some of the key considerations that are important to keep in mind are:

• the "average land value" on your 2010 land tax assessment notice is the average of a three year period, namely the land value for the 2010 year (as assessed on 1 July 2009) and the land values for the previous two years (as assessed on 1 July 2007 and 1 July 2008). An objection may only be lodged against any of the 2008, 2009 and/or 2010 land values, but not against the "average" value;
• the land tax threshold for 2010 is $376,000. Your land tax rate is calculated on the combined value of all the taxable land you own above this threshold, calculated as $100 plus 1.6% of the land value between the threshold and the premium rate threshold ($2,299,000) and 2% thereafter;
• in the context of a generally recognised decline in property values between mid-2008 and mid-2009, if your 2010 land value (as assessed on 1 July 2009) is the same as or higher than the value assessed at the previous two years, this could be unreasonable, and it might be worth obtaining a preliminary valuation report on the "correct" value of the land as at 1 July 2009. This can also be used to support an objection to the land value as assessed at the two previous years (as assessed on 1 July 2008 and 1 July 2009) if you suspect that the valuations are too high;
• a preliminary valuation report can be used as the basis of an objection to the land value on the grounds that the land value is, for example, "too high" (this is the most common reason stated on objection forms). Deadlines apply, with only 60 days from the date of the land tax assessment notice to lodge an objection with the Valuer-General. If you are out of time, the Valuer-General may be persuaded to exercise his discretion to accept a late objection if you can provide compelling reasons for your delay.

What happens next? Determination of objections and appeals

Once your objection is lodged, it will be reviewed by an independent valuer appointed by the Valuer General, and you will be issued with a notice of determination of the objection which allows, partially allows, or disallows the objection. If a notice of determination has not been given within 90 days of lodgement of the objection, the objection is deemed to have been disallowed.

If your objection is disallowed (or deemed to have been disallowed), you only have 60 days from the date of the issue of the notice of determination of objection to lodge an appeal with the Land and Environment Court of NSW.

In considering whether to initiate an appeal, you should undertake a cost/benefit analysis to determine whether the cost of conducting an appeal is justified in light of the possible land tax reduction available. In this regard, it is important to keep in mind that a consequence of the three year "averaging method" is that a challenge to the current years' inflated land valuation continues to provide reductions in both current and future land tax liability, at least for three years.

As mentioned above, you have an opportunity to revisit objections to the land values for the previous two years that are used in calculating the current years' land value courtesy of the averaging method. This is a useful and convenient way of getting around any missed deadlines and disallowed objections concerning the valuations of your land in the previous two years. Keep in mind that if you are lodging a second objection to the land values for the previous two years, you must provide new information, addressing valid objection criteria, to support your concerns that the land value is incorrect. Perhaps the most important benefit of objecting to all three years' land value, however, is that successful objections to all three years' land value will also result in a substantially higher land tax saving than an objection to a single year, without necessarily involving substantially more expense and effort on your behalf.

If you are considering an objection or appeal in relation to your 2010 land value (or the 2009 and 2008 land values), seek advice. Gadens has significant national experience in land valuation matters. In NSW, for example, we advise on all aspects of land valuation, including assisting clients in determining whether to lodge objections against the assessed land values, preparing and lodging the objections, liaising with the Valuer General of NSW, and where such objections are refused, representing our clients in appeal proceedings in the Land and Environment Court of NSW or the ACT Civil and Administrative Tribunal. Where possible, we try to resolve valuation disputes through early mediation to avoid the cost and uncertainty of court or tribunal proceedings.

Please contact us if you would like further advice on how you can reduce your land tax liability.