Transparency in the valuation of land for land tax purposes in New South Wales

Transparency is an important taxation principle in maintaining integrity in the taxation of land. This paper is a review of improvements in transparency following recommendations for reforms to the valuation of land by the NSW Ombudsman in 2005. Data on objection rates to land values has been sourced from the NSW Department of Lands both pre and post the introduction of the 2005 reforms recommended by the NSW Ombudsman. This paper attempts to measure improvements in transparency via changes in objection rates to land values issued by the Valuer-General, resulting from the availability of sales information to land tax payers from 2005. In conclusion a summary of improvements in transparency are provided as well as recommendations for refinements in the development of further transparency measures which may be adopted. © School of Taxation and Business Law (Atax), Australian School of Business

The evolution and operation of recurrent property taxation

Recurrent property taxation is an important revenue stream for sub-national governments around the world. In its various forms, land value as a base of recurrent taxation has become less common in many countries over the past twenty years. This has largely been attributed to a number of factors ranging from pressure imposed by opponents of land value taxation, to challenges against non-demonstrable methods of assessing the underlying value of land in highly urbanized locations, where land transactions are few. This paper is a review and critique of the evolution of recurrent property taxation and the transition of the base of this tax from land to improved value in some countries. It analyses the methodological voids which have armed opponents of land value taxation with the justification for such a transition to alternate bases. It further articulates the difference between local government council rating and a broader non-earmarked land tax. A United States case study has been used to demonstrate the demise of land as the base of recurrent property taxation and the emerging similarities in Australia. In conclusion, the paper provides a framework for the harmonious coexistence of land value taxation and the rating of land and establishes key requirements in developing and maintaining a robust land value taxation system in highly urbanized locations

Urban Cleansing and Renewal: Redfining the Principles of Compensation in Compulsory Acquisition

The process of compulsory acquisition for the purposes of urban renewal and economic development are becoming more common as populations continue to grow in urban built up locations and more intensive users of land is warranted. the most practicable process for site assembly and the provision of higher and better uses of land may well be argued to be through the process of compulsory acquisition. This paper explores the hybrid use of compulsory acquisition powers for the taking of land by local government from one party and the reselling of that land to a developer for a more intensive and similar use. It contrasts the use of the Pointe Gourde principle between traditional public purposes and the emerging purpose of economic development in the assessment of compensation. Two cases are used defining the emerging purpose of economic development in Australia and the United Kingdom. A third case demonstrates a dichotomy between the compensation principles of assessing betterment in partial acquisition cases and contrasts this against the opposing principle used in total acquisitions in the specific circumstances of economic development. A model is developed which defines the dispossessed party as a stakeholder in the economic development of land, in which consent for the defined purpose of economic development is a natural progressive step in defining the highest and best use of land

Property Tax Reform: A contribution to home ownership and challenges for government in Australia

The 2009 review of Australias tax system made recommendations for improving housing affordability, particularly in the capital cities of Australia. Among the recommendations made was the removal of conveyance stamp duty and replacing this impost with a recurrent tax on land spread across the holding period of property, of which the later provides steady and more consistent revenue for government. This paper examines the relationship and emerging trends between State government taxes which impact on entry to homeownership and examines options for the move from transaction taxes to a recurrent tax on land. Through the analysis of conveyance stamp duty currently paid on the purchase price of property and a uniform recurrent tax on land, it is demonstrated that options exist for the transition from less efficient to more efficient taxation of property, while reducing a barrier to entering the housing market

Defining the basis of value in land value tax

Recurrent land taxes are an important revenue source for sub-national government internationally and are assessed on a number of different bases of value. This paper examines the various bases of value on which this tax is assessed internationally then focuses on the valuation of land, being the dominant basis of value used to assess this tax in Australia. Valuation experiments are used to examine the valuation practices of valuers in highly urbanised locations where vacant land sales are rare. It demonstrates the challenges of using value as the base of this tax and in particular land or site value used in Australia. The paper concludes that while issues exist in the determination of any basis of value, the practices of valuers are most important in the determination of a consistent and neutral base on which to assess the tax

Just Terms Compensation and The Compulsory Acquisition of Land

Just Terms Compensation in Australia is predicated on the principles of placing the dispossessed party in the same or similar position prior to the acquisition of their land. This compensation is based on various statutes and rulings by the courts which have evolved over several decades and have guided the assessment of value and quantum of compensation in the acquisition process

The epistemology of value in the assessment of just terms compensation

Compulsory acquisition of land in Australia is predicated on the principles ofjust terms Icompensation. Based on these principles, the determination of compensation is subject to various statutes and court rulings. This article examines these principles and moves on to discuss the gaps in parity of compensation and how these gaps affect parties in the compulsory acquisition process. The article also looks at the influence compensation quantum and principles have over the value of properties, discussing how that value is determined and how valuation methods are used. It reviews a survey of dispossessed property owners in New South Wales, Australia, that was conducted to measure the success of the legislation and processes. Finally, the article concludes with an analysis of court directives; it asks whether these contribute to the impasse of points of difference in the assessment of value (and hinder the courts) when in fact they were designed to help Australian courts in expediting compulsory acquisition matters

Do valuations assist residential property investors prior to purchase? : an industry perspective

University of Technology, Sydney. Faculty of Design, Architecture and Building.As residential property grows as an investment vehicle, with an increase in this asset class included in retirement planning, greater focus is now concentrated on the price paid for property and the relativity of that price to its value and how that value is determined. In addition, consideration has also begun to centre on the quality and suitability of residential property purchased for investment purposes and the risks associated with inappropriate property being purchased, particularly by investors nearing, or entering retirement with limited capacity to replace their capital. This thesis considers the issues confronting residential property investors, the level of understanding about the attributes of property that contribute to value, the level of information available and the quality of advice provided to property investors. The thesis brings to the fore the present uses of valuation advice and the suitability and limitations of that advice for property investors in formulating the price to be paid for property. A survey of seven professions confirms support for the use of valuation advice by residential property investors and their investment advisers prior to purchase. The survey is in contrast to literature which raises doubts about the quality, format and information currently provided in valuation advice and its appropriateness and usefulness in serving residential property investors in meeting their investment objectives. In conclusion, issues that may be addressed by the valuation profession in assisting residential property investors provides a way forward for the profession to break free of the dominance of providing point-in-time values for lending institutions. Recommendations addressing the quality of property investment advice and the use of property investment seminars as a conduit of sale have been made