Assessment notices, now landing in mailboxes, are proving a shock reminder for commercial and industrial property owners of the impact of recent land tax changes. 

On March 11, the Queensland Valuer-General implemented some of the steepest and most aggressive valuation increases in years. 

Kollosche Commercial Sales Agent Adam Grbcic, who has previously held a valuer’s license, said the implications of the changes were only now starting to hit hip pockets in what he says are a ‘double whammy’ of tax increases.  

Under the revamp, Gold Coast industrial land values lifted 53.3 per cent and commercial land 19.2 per cent. Overall, more than 152,000 properties across the Gold Coast have been subjected to a 23 per cent jump in value, equal to $195.35 billion. 

The Valuer-General attributed the industrial surge to strong demand against limited land supply, while commercial values remained at near historic-low vacancy rates. 

Mr Grbcic said the extra sting for ratepayers was the simultaneous rapid increase in state land tax revenue, which the Queensland Treasury has forecast will climb from $2.7 billion this financial year to $4.8 billion by 2029-30, with the $600,000 tax-free threshold remaining unchanged since 2007. 

Both rates and land tax are calculated directly from the statutory land value, so the increase lifts both bills automatically.  

Mr Grbcic said land tax compounded the problem because it was progressive. A large jump in land value can push an owner into a higher bracket, meaning the tax can rise faster than the valuation itself. 

“Lease structure decides who ultimately absorbs the increase,” he said. 

“Under a net lease, the tenant reimburses rates and land tax on top of rent, so the rise passes straight through and the owner’s net income is largely protected. 

“Under a gross lease, the tenant pays one flat rent and the owner covers all outgoings from that figure. There is no pass-through, so when rates and land tax rise, net income falls for the rest of the term and the owner cannot recover it until the next rent review, if the market allows it.” 

In many cases, the additional sums can be significant. For example, an industrial property on a gross lease returning $150,000 a year that absorbs an $18,000 rise in combined rates and land tax will see its net income fall by that same $18,000.  

If commercial property is valued on net income divided by yield, at a 6.5 per cent yield that single increase would strip roughly $277,000 from the asset’s capital value until the lease is restructured. 

Mr Grbcic said owners who treated this year’s notice as just a rates issue were underestimating the change.  

“On a gross lease, it’s a direct hit to capital value and it stays that way until you can reset the terms.” 

The formal 60-day objection window on the March valuations has passed, so owners who consider the figure on their land tax notice is unsupported will need to pursue reassessment through the Queensland Revenue Office or wait for the next valuation cycle. 

Mr Grbcic said owners should treat the current notices as a trigger to review lease structures at the next renewal. 

“It would make sense under the new regime to build fixed annual increases into gross leases to keep pace with outgoings and reassess true net returns before deciding whether to hold or sell.” 

If you need advice on how to position your assets or are considering bringing a commercial asset to market, reach out to our specialist commercial agents Adam Grbcic and Tony Grbcic for expert advice.