ATO – OUT TO GET PROPERTY INVESTORS!

This is an email that I have copy & pasted.
It was sent to me from an accountant today….[wha]

GST – PROPERTY OWNERS WARNING!

The ATO will request and collect names and addresses and details pertaining to property title transfers from the Victorian State Revenue Office (SRO).

A special section has been established within the ATO – the Risk Assessment Team Southern (RATS) whose task will be to:-

Address non compliance with registration (Income Tax, ABN and GST);
Check and assess correct completing and assessment of property transactions;
Address lodgement and debt payment through electronic bulk matching data to identify potential ATO activity;
Provide education to clients confused with their obligations in relation to these types of transactions; and
To be more strategic in its approach to ATO business activities.
Records relating to some 552,000 transactions registered with the SRO will be data matched!

When you combine this with the data the ATO is obtaining re the issue of building permits, you realise that the ATO has become very serious in enforcing all aspects of its legislation in relation to property dealings!

Indeed, there will be instances where, as a consequence of the activities undertaken by the RATS, information will be provided back to the SRO causing the SRO to raise assessments for additional stamp duty.

There are no secrecy provisions preventing the exchange of information between the ATO and the SRO.

Given the amount of money involved, professional advice is an absolute necessity when dealing with property transactions.

VICTORIAN LAND TAX REFORM?

What the Government giveth:

The tax free land tax threshold is to increase by $25,000 to $175,000 from 2004/5; and
Over a FIVE YEAR period, the top land tax rate will be reduced from $54,880 tax plus 5% to plus 4% for 2004. Thereafter the 4% will reduce by a whopping .25% per year until 2008/09 when it will rest at plus 3%.
The Government taketh away:

BUT all of the land tax brackets in the range $675,000 to $1,080,000 will be INCREASED BY 10% over the next two years.

COMMENT:

Despite dressing this up as Land Tax “Reform”, we bet that the Government coffers will not suffer as a consequence. Consider the increase of 10% in the middle range of land values almost IMMEDIATELY versus the 1/4% reductions in the top rate OVER THE NEXT 5 YEARS. This together with the increased values that will kick in over this time frame will more than offset any tax “reduction”.

To us, this is just another form of bracket creep and it seems to us that our State pollies have learnt how to use it to advantage the same as their Federal counterparts do with income tax.

On the topic of land values, note that all councils are right now carrying out a new round of property valuations and the new site values they come up with will first appear on your upcoming rate notices and will, thereafter feed into your land tax assessments. Watch out for the new values when the rate notices appear.