From the 2020-21 financial year

Minor interests may be disregarded when considering eligibility for a principal place of residence.

If the residing owner only owns an interest in the property of less than 50%, they may not be eligible for an exemption where the residing owner holds an interest of:

• 5% or less, unless the Commissioner is satisfied that the resident’s interest was not for a purpose related to the reduction of the amount of land tax payable; or
• between 5% and 50% and the Commissioner has formed the opinion that the resident’s interest was created to reduce the amount of land tax payable.

See the land tax exemption on your residential home page for more details on the principal place of residence exemption.

2008-09 to 2019-20 financial years

Minor interest provisions address the practice where owners of more than one piece of land avoid paying higher marginal rates of land tax by structuring their ownerships so that another party (or parties) hold a minor interest (legal or beneficial) in an individual piece of land thereby creating different legal and beneficial ownerships.

Minor Interest of 5% or less

Where land is owned by 2 or more persons and one or more of those persons hold an interest in the land of 5% or less (the "Minor Interest"), the person or persons holding the Minor Interest will be taken not to be an owner of the land for the purposes of assessing land tax. In such cases, the land tax payable in respect of the relevant land will be assessed, and is payable, as if the land were wholly owned by the owner or owners of the land who do not hold the Minor Interest (the "Owner"). The relevant land will therefore be aggregated with any other land owned by the Owner for the purposes of assessing land tax.

The Owner may apply to the Commissioner of State Taxation (the "Commissioner") in writing, to request that the Minor Interest not be disregarded for the purposes of assessing land tax, on the basis that the Minor Interest was created solely for a purpose, or entirely for purposes, unrelated to reducing the amount of land tax payable in respect of any land. Where an application is made and the Commissioner is satisfied that there is no doubt that the Minor Interest was created solely for a purpose, or entirely for purposes, unrelated to reducing the amount of land tax payable in respect of any land, the Minor Interest will not be disregarded by the Commissioner for the purposes of assessing land tax.

Minor Interest between 5% and 50%

Where a person or persons hold an interest in land of greater than 5% but less than 50% the interest will be disregarded for the purposes of assessing land tax only if the Commissioner forms the opinion that the purpose or one of the purposes for the creation of the interest was to reduce the amount of land tax payable in respect of any land.

Minor Interests and Trusts

Between the 2015-16 and 2019-20 financial years, the Commissioner may disregard minor interests which are created by a trust relationship. Specifically, the Commissioner may disregard:

• a minor interest in land held by a trustee on trust irrespective of whether the trustee holds a more significant legal interest in the same land in another capacity; and
• minor interests in land held by beneficiaries or potential beneficiaries, such interests being deemed to be an actual interest in the land.

Additional Information

The Commissioner may have regard to the following criteria to determine whether a minor interest should or should not be disregarded for the purposes of assessing land tax:

1. the nature of any relationships between the owners or beneficiaries of the relevant land, or between the owners or beneficiaries of two or more pieces of land;
2. the lack of consideration, or the amount, value or source of the consideration, provided in association with the creation of the interest;
3. the form and substance of any transaction associated with the creation or operation of the interest, including the legal and economic obligations of the parties and the economic and commercial substance of any such transaction;
4. the way in which any transaction associated with the creation or operation of the interest was entered into or carried out; and
5. any other matter the Commissioner considers relevant.

An interest in land will not be disregarded if the effect of disregarding the interest is to decrease the amount of land tax payable in respect of any land.

An interest may be disregarded by the Commissioner regardless of whether it was created before or after the commencement of the provisions.

A person who is dissatisfied with a decision of the Commissioner may lodge a written notice of objection with the Treasurer. See our Objections page for more information.

Where a minor interest in land has been disregarded the holder of the disregarded interest is not eligible for an exemption.

For further information, please refer to the Land Tax Guide to Legislation (2019-20 edition).

Contact us