Victoria’s State Tax Reform 2025: What Property Owners, Developers & Advisors Need to Know

In May 2025, the Victorian Government introduced the State Taxation Acts Amendment Bill 2025 which provides various changes that will impact landowners, developers, trustees, and individuals navigating Victoria’s complex tax landscape.

This article outlines the key changes, with commentary on practical implications, compliance requirements, and planning considerations for clients and advisors alike.

The Bill and accompanying Explanatory Memorandum provide more information on the changes discussed below.

Extension to Off-the-Plan (OTP) Stamp Duty Concession

The current OTP concession has been extended again for eligible contracts entered into on or before 21 October 2026. The concession reduces the stamp duty payable by deducting construction costs from the sale price when determining the duty liability. The concession can result in substantial stamp duty saving for the buyer.

The extension provides continued relief for buyers (home owners and investors) of newly built apartments, townhouses and units and will reduce upfront costs to make property more affordable and support housing supply growth with the encouragement of pre-sales.

As the extension is again temporary, rather than the introduction of a permanent concession, developers and advisers should encourage eligible purchases to act before the deadline of 21 October 2026.

For further information on this exemption, please refer to our previous update: New temporary off-the-plan duty concession – SW Accountants & Advisors

Land Tax Exemption for Family Violence Victim-Survivors

Individuals who flee their principal place of residence (PPR) due to family violence may now:

• Receive a land tax exemption for up to 6 years, and
• Requalify for first home buyer benefits under the Duties Act if they purchase a new home.

This reform helps prevent victim-survivors from losing critical concessions during an already traumatic life event. It recognises the economic vulnerability caused by displacement and aims to provide a financial safety net.

Advisors should ensure clients are aware of this exemption and support them in assembling evidence (e.g. intervention orders, police reports) to substantiate claims. It’s a rare intersection of social policy and taxation.

Build-to-Rent (BTR) Concessions – Expanded compliance Obligations

Victoria’s BTR regime continues to evolve, with tightened rules to further uphold the intended purpose of the concession. The key changes introduced by the Bill include:

• Genuine 3-Year Lease Offer: BTR developers must offer tenants a lease of at least 3 years. If a shorter lease is accepted, a declaration signed by both parties must confirm the longer lease was offered.
• 12-Month Lease Minimum: Short-term leases (<12 months) are prohibited from 1 January 2026, except where they follow on from a long-term lease (e.g. as an extension).
• Commissioner’s Discretion: If a property is temporarily uninhabitable (e.g. due to renovation, disaster), the Commissioner may disregard this period when assessing eligibility for BTR benefits.

These provisions are designed to enforce the long-term housing intent of the BTR regime and avoid exploitation via serviced apartments or short-term rentals. Requiring signed declarations ensures the 3-year offer is not a token gesture.

The prohibition on short leases supports stable tenancies but may reduce flexibility in tenant arrangements. BTR operators must ensure their internal processes capture offers, declarations, and tenancy records. Failure to document properly could jeopardise eligibility for land tax concessions.

The Commissioner’s discretion on uninhabitable periods provides welcome relief, offering flexibility in genuine cases of vacancy due to repairs or emergencies. However, expect the SRO to require detailed evidence for such claims.

CIPT Reforms

The Commercial and Industrial Property Tax (CIPT) regime introduced in 2024 has been updated, with reforms focused on clarity and integrity. The key changes include:

• Provisional Use Assessment: Where land lacks an Australian Valuation Property Classification Code (AVPCC), the Commissioner may provisionally determine whether it qualifies for CIPT based on actual use.
• Valuations for Non-Rateable Land: The Commissioner may now request a formal valuation from the Valuer-General for non-rateable or non-leviable land.
• Subdivision Clawback: If a parent lot enters CIPT as a partial transaction, and is subdivided within 3 years, duty will apply to purchases of child lots.

The ability to determine qualifying use without relying on AVPCCs removes administrative bottlenecks, particularly for new developments or rezoned land. Requesting VGV valuations ensures the regime can’t be sidestepped by holding land outside typical local government frameworks (e.g. charities or Crown leases). These stakeholders should re-evaluate holdings for CIPT exposure.

Finally, the subdivision clawback is a targeted anti-avoidance measure. Developers can no longer rely on staging subdivisions to defer or avoid duty once land is partially transitioned into CIPT. It underscores the need for comprehensive structuring advice from project inception.

Trustee Notification Requirements Simplified

Trustees are now only required to notify the SRO of land transactions where:

• they cease to hold land as trustee and acquire it personally, or
• they change the trust under which they hold the same land.

This significantly reduces red tape for routine changes, such as retiring/resigning trustees or administrative changes within a trust and isa change that aligns with practical trustee conduct. However, proper documentation still remains essential when changing the trust deed or transferring beneficial ownership, as these changes may still trigger duty or other tax consequences.

Penalty Tax for Recklessness

An amendment to the Taxation Administration Act 1997 (Vic) introduces a 50% penalty tax for recklessness by a taxpayer or a person acting on their behalf in respect of the taxpayer’s obligations. These penalties will be issued in respect of tax default and notification defaults.

The new penalty level signals that the State Revenue Office will adopt a firmer stance on non-compliance that stems from recklessness. This therefore underscores the importance of:

• Diligent Compliance: Ensuring that all tax obligations are met with due care an attention.
• Professional Advice: Seeking guidance from qualified tax professionals when uncertain about tax positions or obligations.
• Documentation: Maintaining thorough records of decisions and advice received to demonstrate the basis for tax positions taken.

How SW can help

At SW, our property and stamp duty experts can provide analysis and advice around the changes introduced in the Bill and identify the impacts that they can have for you.

Please contact our SW advisors for more information on how the changes may impact you.

Key contacts

William Zhang – Associate Director, Tax
Blake Trad – Consultant, Tax