Exemptions and concessions from land tax are available for land owned or used by a charitable organisation under certain circumstances under section 74 of the Land Tax Act 2005 (LTA).
Land is exempt from land tax if it is:
- Used and occupied by a charitable institution exclusively for charitable purposes (current charity exemption). This applies from the 2022 land tax year. Prior to 2022, land is exempt land if it was used exclusively for charitable purposes.
- Vacant and owned by a charitable organisation and is declared to be held for future charitable use (vacant land charity exemption). From the 2022 land tax year, a charity will need to satisfy the Commissioner that the relevant land (or part of the land) will be used and occupied exclusively for charitable purposes within two years or a longer period approved by the Commissioner from the tax year to which the Commissioner’s determination applies.
- Owned by a charitable organisation and leased for outdoor sporting, outdoor recreational, outdoor cultural or similar outdoor activities and available for use for one or more of those activities by members of the public (charity outdoor leasing exemption). This applies from the 2022 tax year. Prior to the 2022 tax year, the land is not required to be owned by a charitable institution but the proceeds from the lease must be applied exclusively for charitable purposes.
Apportionment of exemption
Where only a part of the land meets the requirements for the charity exemption, that part of the land is exempt from land tax. The remaining land is subject to land tax unless another exemption applies to it. For example, a charitable institution only uses and occupies a part of the land exclusively for charitable purposes, or a charitable institution leases part of its land for outdoor sporting activities which are available for use by the public.
Land tax is generally calculated on the total taxable value (i.e. aggregated value) of a taxpayer’s landholdings. However, land or part of land owned by a charitable institution that is not exempt from land tax is assessed as if it is the only land owned by the charity. This means that each taxable land is assessed for land tax on a single holding basis for the relevant tax year. No land tax will be imposed if the site value of the land is below the tax-free threshold.
Charitable exemption from 2022 land tax year
Guidance on the application of the charity exemption from the 2022 land tax year onwards is provided in Revenue Ruling LTA-009.
Charitable exemption prior to 2022 land tax year
Guidance on how to determine whether a charitable organisation would be entitled to the charitable exemption prior to the 2022 land year is provided in Revenue Rulings LTA-004 and LTA-005.
Applying for an exemption
Step-by-step instructions are available to assist an owner of land applying for a land tax exemption or concession.
The owner of land should pay any land tax liability which is due for payment in full or by instalment while the exemption application is being determined.
If you do not pay the assessed tax on time and your application is disallowed, interest may accrue daily on the outstanding amount.
You may be entitled to negotiate a provisional amount to pay if there is a partial amount of the total owing that is not in dispute. You should indicate if this is the case when you apply for an exemption.
Changes in circumstance
If any material changes arise during the exemption period, the owner of land or charitable organisation is required to notify us as soon as possible in writing.
Changes to the aims and objectives, or the principle activities and services of the organisation, or changes to the use of the land may cause the land to become ineligible for the exemption.
Omissions and errors
Owners of land who are unsure of their tax obligations or who believe that they have incorrectly received an exemption for non-exempt land should contact us to make a voluntary disclosure.
You should also notify us of errors or omissions in your land tax assessment notice within 60 days from the assessment issue date.
Failure to notify us may constitute a notification default, which can result in a liability for penalty tax. This is calculated on the additional amount of tax that would have been assessed had the notification been lodged on time.