Local government areas being revalued in 2010 include Brisbane, Bundaberg, Gold Coast, Moreton Bay, Redland, Rockhampton and Townsville. Many of these areas have not had increased valuations in at least two years, due to the ‘frozen valuations’ measure that the Queensland Government implemented in early 2009.

Annual valuations will shortly be issued by the Department of Environment and Resource Management (DERM), which estimate the amount for which land could be expected to sell without ‘improvements’. Valuations are used for a variety of purposes including for Council rating purposes and the imposition of land tax by the Office of State Revenue, which will impact on the cash outflows of individuals and businesses.

Valuation methodology amendments

Currently the Valuation of Land and Other Legislation Amendment Bill 2010 (Bill) is before the Queensland Parliament. The Bill proposes very significant changes to the valuation methodology used in valuing non-residential properties, in light of a recent Queensland Court of Appeal case. This case concerned the interpretation of amendments made in 2008, which were intended to provide clarity regarding appropriate valuation methodologies to be used in valuing properties.

The Government is now of the view that in light of the Court’s recent interpretation of these provisions further amendments are necessary.

The proposed amendments have been the focus of intense lobbying. We will provide further updates once the final form of the valuation methodology changes is clear.

Objection rights to valuations

Importantly, if this Bill receives royal assent there will also be a complete overhaul of the legislative provisions containing objection rights regarding valuations, which have not received as much attention despite being very significant changes in their own right.

Although the standard objection period will remain 45 days (unless the landowner can evidence they are eligible to lodge a non-timely objection), the provisions are being amended so that:

• the landowner will be required to provide valuation reports and assessments of insurance replacement cost of improvements if the objection is to be valid (as well as other information that will be prescribed in regulations), and
• the delegate deciding a particular objection (Delegate) is entitled at law to collect all information regarding the value of the property in dispute from the objector (including draft valuation reports, draft town planning reports or records of discussions with third parties such as purchasers, vendors or agents regarding the Objector’s land).

For properties with an unimproved valuation of more than $2 million where the Delegate considers that relevant information (such as valuations for other purposes including finance purposes) is likely to be in the objector’s possession, the Delegate can request the information be provided. The objector has 28 days to comply with this request, with an option to extend by a further 14 days. Depending on the objector’s response, the objection will:

• lapse - if the objector does not respond within the required period (or refuses to supply the requested information) within the specified time frame, and
• continue based on the existing information - if the owner signs a statutory declaration that the information is not in his possession.

The objective of the amendments is to ‘allow for the proper management of a more information rich objection process’. This will be achieved by implementing a much more onerous objection process, requiring landowners to collate significant amounts of information if they are to lodge a valid objection within the 45 day time limit.

Non-timely objections

Objections can still be lodged outside the standard 45 day objection period in certain circumstances. Non-timely objections are those made within one year of the notice of valuation issuing, but more than 45 days after the notice issued. These objections will only be accepted where the land owner can provide evidence that they were unable to lodge a timely objection through no fault of their own. This can be difficult given:

• there is an onus on the landowner to notify the DERM of any change in address (for notices to be sent to), and
• valuations for an area are advertised as being made and landowners have the ability to inspect the valuation roll, generally at the local council.

Landowners should be aware that merely not receiving a notice of valuation will not necessarily mean they will be entitled to lodge a non-timely objection, and therefore any objection rights to an excessive valuation may be lost unless an objection is lodged within 45 days.

Implications for land tax

Land tax is assessed at 30 June each year for the coming 12 months, based on the annual valuation issued in the previous March. The actual land tax assessments usually issue in the following August/September.

An excessive valuation is not a valid ground to object to a land tax assessment so it is important individuals and businesses consider the likely land tax implications of valuations within 45 days of receiving a notice of valuation (by mid May).

If the new objection provisions receive Royal Assent then any objections lodged regarding 2010 valuations will need to comply with the new provisions, which will be more onerous as to the information required to be lodged within the 45 day objection period.

Further advice

For further assistance or enquiries regarding valuations and its interaction with land tax please contact:

Tax

Mark West on 07 3233 8871
Lyndon Garbutt on 07 3233 8921

Property

Kristan Butler on 07 3233 8848
Andrew Muir on 07 3233 8836.