TAXATION ACROSS AUSTRALIA
was the first state to levy a tax on land values in 1857. Tasmania's
current legislation was passed in 1952. The land value base is the
assessed annual value; an annual rental value.
the Tasmanian system
introduced the land value (unimproved value) system in 1887 for rural
areas and in 1890, despite a nationwide and international depression,
it was extended to urban areas. It is the only system used in
Queensland being also used by the Metropolitan Water Sewerage and
Drainage Board in Brisbane.
the Queensland system
1893, South Australian municipalities were given the choice of
adopting a land value system but with severe restrictions that
hindered its general adoption. Today, only 4 councils have opted to
tax on land values with the remainder opting for improved values.
the South Australian system.
Western Australia, the Roads Act 1902 gave Road Boards permission to
use either a site value or annual value system to raise revenue. The
majority opted for the site value system. Urban municipalities were
given the same power in 1945.
rating legislation was passed in 1920 and within the next ten years,
9 of the 28 municipalities in greater Melbourne adopted the new
system including the choice of site values. Each municipality is
allowed to choose its own rating base. Of the 210 municipalities
about 150 have opted for net annual value (NAV) and 60 for site value
(SV). The option to use a capital value base was available to
municipalities from the 199211993 rating year.
valuations based on unimproved values every 2 years.
Commonwealth Government introduced the Land Tax Assessment Act,
191Othat was designed to break up large land holdings. The tax was
based on unimproved values but was repealed in 1952 when its legality
was threatened as being unconstitutional. However, in Osborne v
The Commonwealth (1911)12 CLR 321 the High Court held that
although the tax was progressive and designed to break up large
holdings it was legal.
state acts for example, the Land Tax Act, and Land Tax (Management)
Act 1956 in NSW replaced it. The NSW tax was a progressive tax until
1986 when it was reduced to a flat 2 cents in the dollar rate. The
monies so derived are placed in state revenue and therefore, do not
go directly to local government.
land tax legislation in NSW was the Land and Income Tax Assessment
Act 1895using unimproved values. In 1906, NSW abolished the annual
rental value system and made it compulsory for municipal councils
both urban and rural, to use the unimproved value for a minimum rate.
However, the balance could be raised by a tax on both land and
buildings. The Sydney Harbour Bridge Act 1922 enabled the unimproved
value taxation of land in the City of Sydney, municipalities and
shires that came within the influence of the bridge.
Local Government acts of 1905 and 1906allowed local authorities to
impose rates based on unimproved values.
Local Government Act 1919, replaced the previous local government
acts and provided for the assessment of a general rate on unimproved
value. This has been replaced by the Local Government Act 1993 under
which the main sources of finance for councils are rates, charges,
fees, grants, borrowings and income from investments. The Act allows
for categories of ordinary rates based on whether the land is
residential, farmland, business or mining. There are also special
rates for council services or special purposes such as water,
sewerage or drainage,
current valuation Act is the Valuation of Land Act 1916(as amended).
Under this Act, the central valuation authority, the Valuer General,
was created with the objectives of achieving continuity, uniformity,
and stability of land valuations for property tax purposes. The
initial aim was an idealistic one on the assumption that the values
provided the landowner could be used for all purposes:
object of the Valuation of Land Act, 1916, as gathered from its
provisions, was to have one value for a block of land whether for
taxation or for resumption purposes Pike J, Mobbs v VG 6 LGR
Valuation of Land Act of 1916 is not a taxing Act, as many people
seem to think. The object of that Act was to bring into line the
serious differences that used to exist between the valuation of land
for taxing purposes and the value of land for compensation and
mortgage purposes; under the Act the one value applies in every case.
It applies for compensation as well as for rating Pike J,
Alison v VG 6 LGR 25.
idealistic aims soon dissipated, as the cost of upkeep of a proper
Improved Value tax system was far too prohibitive. The shortage of
qualified and experienced staff meant that assumptions and
qualifications in the definition of market value were necessary to
maintain an efficient tax system. These controlling factors still
apply today. The original tax bases were:
value: replaced by land value in 1978.
value: no longer used
annual value (AA V).
is virtually no difference between the old unimproved value and the
later land value in urban areas however, in certain non urban areas
it allows the valuer to disregard the original state of the timber
and determine land value based on the existing economic clearing of
the property. Land values are now the compulsory value base for local
councils and on all residential land for the Waterboard.
improvements (invisible improvements) such as reclamation and
drainage are included as part of the land value but they must be
value is a statutory value subject to a number of statutory
conditions and assumptions. It is the present value of the land
excluding manmade structural improvements such as houses, fencing,
and driveways. See definition above.
ground Improvements are those improvements that "merge"
with the land and therefore, are difficult to differentiate from the
land. They are also called invisible improvements for example,
reclamation, drainage, and clearing.
1916 Act has been replaced by the Valuation of Land Act 2003. The
basic definitions are still the same.
ANNUAL VALUE (AAV)
AAV is an annual improved value subject to certain statutory
assumptions and is used in by the Waterboard for the taxing of non
residential land. It is defined as follows:
The assessed annual value of land is
nine tenths of the fair average value of the land, with the
improvements (if any) thereon; or
is the greater' s7(1) Valuation of Land Act 1916.
provisions apply in s7C for the AAV of strata.
1986, in order to overcome problems of along lead time between
general valuations, the NSW Government introduced the concept of
equalisation factors. Between general valuations an adjusted value is
determined by applying the relevant equalisation factor to the base
date land value.
Valuer General determines the equalisation factor each year for each
zone in each local government area. The factor is multiplied by the
nominal land value to approximate a value that would have been
applicable if a General Valuation had been made at the equalisation
date or common base date.
INTO PROPERTY TAXATION
has experienced a number or enquiries into the property taxation
system. These have examined and established factors and ideals for
improving the property tax system. The following are the most
OF INQUIRY 1960 (NSW)
NSW Committee of Enquiry 1960 (The Bridge Report) recommended
no major change in the use of unimproved values but rather, fine
tuning of the statutory definition. However, the committee did
recognize the following problems with the concept:
would be futile for valuation purposes in England or the European
Continent, to speculate whether land was marsh or forest or open
country at some long past period .... It is important that the
concept of value should be capable of reasonably precise
determination... It can readily be appreciated that in determining
Unimproved Values of pastoral and agricultural lands, the most
contentious are those relating to the amounts allowed for treatment
of timber, scrub and undergrowth.
although recognizing anomalies in the unimproved value definition
particularly for rural lands, the Committee was not prepared to
embrace the land value concept.
QUEENSLAND COMMITTEE OF ENQUIRY
Queensland Committee of Enquiry also recognized problems with the
valuation of timber treatment for rural land:
requirement introduces unnecessary uncertainty and complexity in the
valuation process and provides differences, disputes and litigation
between the valuing authority and the owner'.
NSW ROYAL COMMISSION (1967)
NSW Royal Commission made specific recommendations on the problems
recognized in the Bridge Report ( a previous governmental report):
theory behind the recommendation made by the Bridge Committee was
that the owner of the land would recoup himself for the cost of such
invisible improvements through increased productivity due to the
performance of the work, or it and when the land is sold .. . by the
price received for the land.
Commission recommended important changes to the valuation base
particularly, the introduction of land values to overcome a number of
role of property tax or a tax on immovable property as part of public
revenue has not been very well considered in governments particularly
the Federal Government. However, the dearth of debate and
understanding not only applies to governments but also academics. In
this context property taxation will now be analysed under the
criteria of good taxation.