Pittwater Life March 2023 Issue

tions in tax are passed on
more slowly due to the lagging
effects of averaging. This is the
situation we have now but it’s
not the whole problem.
The rest of the problem
relates to the determination
of valuations. My understanding
is the VG undertakes
broad-brush, desktop-based
valuations to come up with
numbers that have little
resemblance to what you or I
may equate to the value of a
property when advertised for
sale by a real estate agent, the
percentage changes between
the years however should be
roughly in line with that of
property markets.
Over the past few weeks
we have seen a steady stream
of clients call to enquire how
their land tax notices could
have jumped so dramatically,
in some cases by more
than 300%. In all cases the
valuation uplifts have been
breathtaking.
A couple of examples
include: a townhouse at Warriewood
rising 28% between
July 2020 and July 2021 and
23% between July 2021 and
July 2022. A commercial property
at Mona Vale showing
growth of 13% between 2020
and 2021 and 36% between
2021 and 2022; a south coast
clifftop property rising 68%
from 2020 to 2021 and 46%
from 2021 to 2022.
In the Warriewood example
our property database shows
the change in Warriewood properties
to be a reduction of 6% in
median prices for houses and
2.6% for units between calendar
years 2021 and 2022 on sales
volume that is approximately
40% down on the prior year.
In the South Coast example,
the percentages roughly line
up with the database: 65.5%
for 2020 to 2021 and 31.9%
for 2021 to 2022; the sales
volume however is less than a
third of normal. The inclusion
of only one or two high sales
will drag the averages up and
will impact any broad-brush
valuations.
What do you if you disagree
with your valuation? Here is
where this has the potential
to become another robo-debt
problem. There is an objection
mechanism but it doesn’t
involve speaking to a person.
You still need to pay the notice
sent to you (or interest ap-
The Local Voice Since 1991
plies) and the objection needs
to be undertaken within 60
days of the receipt of the land
tax notice – these have been
mailed out since mid-January
with a few still reaching clients
in mid-February.
The VG’s website outlines
how to go about the objection
process but you can
also engage your own valuer
to prepare a case on your
behalf – and it may be a good
investment. Referring back
to the earlier South Coast
example, there were only 12
property sales in that calendar
year, a weak sample size to
justify such a material price
uplift. The subject property
was clifftop but without direct
beach access and it was valued
equivalently to one that
had better views, no adjoining
neighbour and direct access
to the beach. A property may
have a range of topographical
features or limitations that
may impact UCV that are not
obvious to someone undertaking
a desk top valuation.
It would be my guess that
the VG is going to have many,
many objections to process.
The other thing investors
should check for themselves
is whether their property has
now become subject to land
tax for the first time. The valuation
changes in our local area
and in some typical holiday
areas are well in excess of the
18% increase in the general
land tax threshold – a good
example of bracket creep. The
Office of State Revenue
doesn’t typically work through
tax agents as the ATO does
and your accountant may not
be in position to judge the
UCV of the rental property
included in your annual tax
return.
Brian Hrnjak B Bus CPA (FPS) is
a Director of GHR Accounting
Group Pty Ltd, Certified
Practising Accountants. Offices
at: Suite 12, Ground Floor,
20 Bungan Street Mona Vale
NSW 2103 and Shop 8, 9 – 15
Central Ave Manly NSW 2095,
Telephone: 02 9979-4300,
Webs: www.ghr.com.au and
www.altre.com.au Email:
brian@ghr.com.au
These comments are of a
general nature only and are
not intended as a substitute
for professional advice.
MARCH 2023 65
Business Life