Edited version of private advice

Authorisation Number: 1052316742986

Date of advice: 15 October 2024

Ruling

Subject: Rental deductions - land tax

Question

Is your land tax assessment for the financial year deductible in the corresponding income year under section 25-75 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Land tax incurred in respect of an income-producing premises is deductible in the income year in which the land tax is incurred, that is when the liability to pay them arises, even if the land tax is not actually paid during that year.

In many states, the year in which the property is used for the relevant purposes determines when you are liable, even if an assessment does not issue until a later date.

When you receive land tax assessments in arrears, the amount of land tax is not deductible in the income year in which you pay the arrears. The land tax amounts are deductible in the respective income years to which the liability for the land tax relates.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

You are a non-resident of Australia for tax purposes.

You own the dwelling located at the property.

You use the dwelling for income-producing purposes.

You derived rental income for the entire 20XX financial year.

On XX XX 20XX you were issued a 20XX Land Tax Assessment Notice by the State Revenue Office (SRO).

The amount assessed was for the period XX XX 20XX to XX XX 20XX.

The assessment issued omitted the absentee owner's surcharge.

You contacted the SRO to rectify the issue and they re-issued the correct notice on XX XX 20XX.

You intend to pay the land tax notice in XX 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 25-75