Development Land Tax

Abstract

Development Land Tax came into force on 1 August 1976 by virtue of the Development Land Tax Act 1976 (referred to hereafter as DLTA) and is an integral part of government legislation to ensure that development value in land accrues not to the owner of the land but to the community or State. It is part of an overall legislative programme of which the Community Land Act 1975 is the most important part. Under the CLA 1975 local authorities have the duty to acquire development land and, if they do so, they currently buy at market value, which may include development value. If development value is included in the open market price the local authority actually pays a figure to the vendor net of Development Land Tax, thus ensuring that the purchase price to the authority is reduced, and that any development value accrues to the State by way of tax and not to the landowner selling the land. This situation will continue to the ‘second appointed day’ under CLA 1975, which may not be for at least ten years. When that day dawns all subsequent land purchases by local authorities will be at current use value (as defined later) and the purpose of DLT will largely have ceased. At present and for the foreseeable future, the tax in its full and considerable rigour has to be considered when disposals of land reflect in their price or consideration any value higher than current use value. The basis of the tax is that ‘realised development value’ (RDV) is taxed at the appropriate rate.