Key principle

While the consideration often simply equals the purchase price, in many transactions the purchaser also takes on additional costs or liabilities. It’s not uncommon for contracts to include clauses requiring the buyer to pay a portion of the vendor’s outstanding taxes related to the property.

DA-070 outlines that ‘consideration’ is not limited to the sale price as stated in a contract of sale and that payments by the purchaser towards a tax liability for which the vendor is liable for in respect of the land (Assumed Tax Liability Amount) can form part of the consideration for a transfer of land.

Importantly, DA-070 clarifies that the characterisation of Assumed Tax Liability Amount as consideration will hinge on its substance as opposed to its form. Further, the SRO also notes that labels and payment directions, such as ‘to the vendor directly’ or ‘to a third party’, will not determine the characterisation. Consistent with case law, DA-070 outlines that an Assumed Tax Liability Amount forms part of the consideration for a transfer of land if, assessed at the time of transfer and viewing the transactions as a whole, is part of what moves the transfer.

DA-070 zeros in on specific taxes: land tax, windfall gains tax (WGT), the congestion levy, and rates.

Land tax

DA-070 highlights Section 10G of the Sale of Land Act (1962) (SLA), which prohibits vendors from passing on land tax to purchasers for properties sold where the sale price of the land is less than the ‘threshold amount’. Relevantly, the threshold amount from 1 January 2026 is $10.7m. Therefore, any such purported assumption of land tax would not be able to move a transfer of land and, therefore, cannot form part of the consideration.

However, where the sale price is at or above the threshold amount, then it’s legal for a contract to require the purchaser to pay some of the vendor’s land tax. In those cases, DA-070 states that such a payment will be part of the dutiable consideration, provided it’s truly part of the deal.

Windfall gains tax

Section 10H of the SLA prevents vendors from passing on an existing WGT liability to purchasers at the time of contract, in the same way that section 10G applies to land tax. Accordingly, if a WGT liability has already been assessed when the contract is signed, the vendor cannot make the purchaser pay it, therefore, an existing WGT liability cannot be included as consideration for the transfer of land.

Where no WGT liability exists when a contract of sale is made, it may be included in the contract that if a liability should arise before settlement, the purchaser will assume some or all of the vendor’s WGT liability. In those circumstances, the amount will form part of what moves the transfer of land if it is provided in addition to the sale price, such that the vendor would not transfer the land without that payment. As such, it will be considered part of the consideration.

Congestion Levy

The congestion levy is imposed each year on owners of a car park on leviable parking spaces within the levy area, with owners being solely liable or jointly and severally liable depending on the type of car park.

Under a contract of sale for a car park, the purchaser can agree to cover some or all of the vendor’s congestion levy liability by paying an additional amount. DA-070 provides that if this payment is made on top of the sale price and is essential for the vendor to proceed with the transfer, it is treated as part of the consideration for the land.

Rates

When settlement occurs, rates for the current rating period are usually adjusted so the purchaser reimburses the vendor for any rates paid covering the post-settlement period. This reflects the vendor’s pre-payment for a time when the purchaser will own the property. Under DA-070, the Commissioner will not treat these adjustments as consideration for the transfer of land.

How SW can help

Taxpayers should pay close attention to sale contracts as any assumed tax liabilities could potentially result in a larger duty liability arising.

Our State Taxes team can assist with guiding you through the complexities of land transfer duty and tax liability assumptions, ensuring your transactions complies with the latest SRO rulings.

Contributors

Blake Trad | Senior Consultant, Tax

The post Assumed tax liabilities: What counts as consideration for land transfer duty? appeared first on SW Accountants & Advisors.

Background

Mr Morton was a retired farmer who owned land in Tarneit, Victoria, known as ‘Dave’s Block’. The land had been used for farming continuously for many years before it was rezoned from rural to residential use in 2010, making farming increasingly unviable. Mr Morton and his family wanted to get the best value for their land, so they hired a developer to divide it up, prepare it, and sell it as a residential estate.

They signed contracts with the developer, who was given broad control over financing, dividing the land, earthworks, marketing, and selling the land. The developer was responsible for all the costs and activities and was paid a fee based on a percentage of sales. Critically, Mr. Morton insisted that his land not be used as security for any development finance.

The land was subdivided into residential and commercial lots, and settlements occurred between 2019 and 2021. The Commissioner issued amended assessments, treating the sale proceeds as assessable income, on the basis that Mr Morton was either carrying on a property development business or had ventured the land into a profit-making scheme.

Mr Morton disagreed, arguing that the sales represented a one-off gain from selling something he owned, not regular income from business.

Legal issues

The Commissioner argued that the proceeds were assessable income on two alternative grounds under the Income Tax Assessment Act 1997:

• Mr Morton carried on a business of residential development, deeming the land trading stock
• the proceeds arose from a profit-making scheme under section 15-15.

Mr Morton argued that he had done no more than realise a long-held capital asset, by enterprising means.

The decision

The Full Court unanimously dismissed the Commissioner’s appeal, affirming the primary judge’s conclusion that Mr Morton was merely realising a capital asset.

The Court placed weight on the following factors:

No original profit-making purpose

Mr Morton acquired the land from his father in 1980 to farm, not to develop or sell. The decision to subdivide was driven by external forces — rezoning, rising rates and land tax, and the declining viability of farming.

Limited and passive involvement

Mr Morton played little active role in the development. He did not oversee the project, contribute to planning applications, organise finance, or manage construction. He did not even read the monthly reports the developer provided under the agreement.

Developer bore the commercial risk

The developer was solely responsible for all development costs and financing. Mr Morton’s land was not used as security — a condition he had insisted on from the outset. The Court found this to be a highly significant factor distinguishing realisation from business activity.

Developer acted independently, not as Mr Morton’s agent in a general sense

While the development agreement contained agency-type and power of attorney provisions, the Court found these were facilitative only and limited to enabling the developer to fulfil Mr Morton’s legal obligations, such as executing contracts of sale. They did not convert the developer’s activities into activities carried on by Mr Morton himself.

Scale alone is not determinative

The Court affirmed the well-established principle that the magnitude and the sophistication of a realisation alone does not convert it into a business or profit-making scheme.

Importantly, the Court looked beyond the legal form of the development agreement to its commercial substance — particularly who bore risk, who controlled the project, and whose business the development truly was.

Practical implications

The Morton case is a useful reference point for landowners and advisors navigating the capital/revenue boundary where subdivision is involved. It highlights that outcomes in subdivision cases remain highly fact-dependent. In particular, advisors should focus on:

• who bears financial risk, including funding and security arrangements
• the degree of the landowner’s control and involvement
• the commercial substance of the development agreement
• the landowner’s purpose at acquisition and at the time of subdivision.

The decision sits comfortably alongside earlier cases distinguishing mere realisation from development activity. It reinforces that even modern, large-scale subdivisions can remain capital on the right facts, for example where the landowner lacks development expertise, does not assume financial exposure, and does not exercise significant control over the project. The structure and substance of development agreements should be closely scrutinised.

How SW can help

The Morton decision confirms that tax treatment of land subdivision depends heavily on the specific facts and the terms of the development arrangements. Early and careful structuring of these arrangements is essential.

SW can assist by reviewing development agreements, assessing the risk and control profile of proposed arrangements, and advising on the appropriate tax treatment before transactions are committed to. Please contact your SW advisor to discuss further.

Contributors

Rahul Sanghani

Ned Galloway

Nicolas Hodge

The post Full Federal Court confirms capital treatment for subdivided farmland appeared first on SW Accountants & Advisors.

With 2026 land tax assessments just around the corner, these changes bring key obligations and deadlines that warrant close attention. 

Absentee owner surcharge – notification by 15 January 

The absentee owner surcharge (AOS) is an additional land tax imposed on properties owned by absentee individuals or entities (essentially foreign owners of Victorian land). As of 2026, the AOS is a 4% surcharge on the taxable land value, levied on top of regular land tax. It applies broadly to both residential and commercial land holdings.  

15 January 2026 was the cut-off for absentee owners to notify the SRO of their status, if they were an absentee as of 31 December 2025. Every year, foreign owners must declare their absentee status by 15 January so that the SRO can apply the surcharge in the upcoming land tax assessment. If an owner fails to notify but is later identified as foreign, the SRO will back-charge the surcharge and may impose penalties for the late notification. 

It’s worth noting that exemptions from AOS are very limited. Generally, only developers undertaking substantial development projects (which provide economic benefits to Victoria) might obtain a temporary exemption from the surcharge. Passive foreign investors or landlords are unlikely to be eligible for the exemption. Therefore, affected owners should ensure they have notified the SRO on time and factor the surcharge into their investment returns. 

If you’re an absentee owner and did not yet notify for 2026, contact the SRO immediately. Although the 15 January deadline has passed, making a late notification voluntarily may help reduce penalties. 

Short stay levy – first annual returns due 30 January 2026  

The short stay levy applies to short stays in Victoria from 1 January 2025, on bookings that are less than 28 consecutive days (not including the checkout day). The levy of 7.5% of the total booking fee is to be collected and paid by either: 

The first annual short stay levy return is due on 30 January 2026, with owners, booking platforms, and tenants being required to register before lodging their first return if they have a liability. It should be noted that booking platforms do not need to register individual properties. 

Booking platforms and property owners or tenants who accepted short-stay bookings during 2025 must register for the short stay levy and submit their first annual return by 30 January 2026, provided their total booking income did not exceed $75,000. 

Providers whose short-stay accommodation bookings generated more than $75,000 in 2025 are required to lodge quarterly returns, with the next instalment due by 30 April 2026. 

Failure to register and comply with payment obligations may result in the SRO initiating recovery action for any outstanding levy amounts, along with applicable penalties. 

Vacant residential land tax – notification by 15 February & expanded scope  

VRLT is a state tax designed to discourage empty properties and increase housing supply. Since 2018 it has applied an annual tax (1% of a property’s value, increasing to 3% for long-term vacancies) on residential homes in Melbourne that were vacant for more than 6 months in the preceding year. From 1 January 2025, residential houses in regional Victoria are also subject to VRLT.   

Owners of such properties must notify the SRO each year and then pay VRLT on their land tax bill if liable. Owners of vacant residential land in 2025 are required to notify the SRO by 15 February 2026 of the property’s vacancy status. This notification is mandatory even if you believe an exemption applies (e.g. for newly built homes, holiday homes, or other exempt categories). The SRO uses these notifications to issue VRLT assessment notices for the 2026 tax year. Failure to notify the SRO by 15 February may result in penalties being applied. Owners who have already notified that they are exempt (such as under a holiday home exemption) do not need to notify the SRO again, provided their circumstances have not changed.

Perhaps the biggest change is the expansion in the scope of VRLT. From 1 January 2026, VRLT will apply to land in Metropolitan Melbourne that is capable of residential development but has remained undeveloped for at least 5 years. This will apply to land that is vacant and land with a residence that is partly built but has not been occupied. In other words, long-term ‘land banking’ will now likely attract VRLT. 

The Commissioner of State Revenue (Commissioner) has a discretion to extend this 5-year period. Broadly, the Commissioner will consider residential land as ‘not vacant’ for a tax year if construction of a residence has not commenced after five years and the owner: 

In considering whether to exercise discretion, the Commissioner may take into account factors such as site access limitations, findings related to cultural heritage, environmental or ecological constraints, extreme weather events, delays in utility connections, and ongoing planning appeals. More information on the factors considered can be found in the Government Gazette. 

Heightened SRO compliance focus in FY2026 

The SRO has significantly ramped up its compliance efforts for the 2025–26 financial year, following a year in which more than 90% of its 13,300+ investigations uncovered non-compliance, resulting in $888 million in assessed liabilities. This year, the SRO is targeting high-risk areas across land tax, vacant residential land tax, and absentee owner declarations, with a particular focus on incorrect exemption claims, undeclared absentee ownership, and failure to notify vacant or undeveloped land. 

Property owners and investors should expect increased scrutiny, especially where land is incorrectly receiving principal place of residence or primary production exemptions, or where VRLT and absentee owner surcharge notifications have not been lodged. The SRO is also closely monitoring properties claiming the holiday home exemption and land held in a trust or by foreign owners. With advanced data-matching tools, the SRO is well-positioned to detect and penalise non-compliance. Early engagement, accurate reporting, and professional advice are essential to avoid reassessments and penalties. 

How SW can help 

Navigating Victoria’s 2026 land tax environment can be complex, with new levies, expanded obligations, and heightened SRO scrutiny. SW can assist you in navigating these obligations by assessing landholdings to determine potential liabilities under the rules, ensuring all relevant notifications are submitted on time, and implementing strategies to minimise exposure to penalties and reassessments. 

Contributor

Blake Trad

The post Navigating Victoria’s 2026 land tax environment appeared first on SW Accountants & Advisors.

Key legislative changes

Commercial and Industrial Property Tax Reform Act 2024

The Bill makes targeted amendments to the Commercial and Industrial Property Tax Reform Act 2024 (CIPT Reform Act) to address technical anomalies and ensure the scheme operates as intended.

The key change is a tightening of the criteria for when a transaction causes land to enter the commercial and industrial property tax scheme. Under the new rules, a transaction will fall within the CIPT regime only if duty is payable on at least 50% of the land’s unencumbered value. This closes loopholes where nominal or minimal duty could previously result in land entering the scheme, such as in certain partitions or concessional transfers.

The Bill also clarifies the calculation of ‘entry interests’ and ‘qualifying transactions’, ensuring that only the portion of the interest on which duty was actually paid is counted for tax reform purposes. Transitional provisions ensure these amendments apply retrospectively from 1 July 2024, aligning the law with its intended operation from the commencement of the CIPT scheme.

Congestion Levy Act 2005

The State Taxation Further Amendment Bill 2025 introduces several important changes to the Congestion Levy Act.

Most notably, parking spaces used exclusively for residential purposes—including those in hotels, serviced apartments, and clubs providing accommodation, are now excluded from the congestion levy. This simplifies compliance for residential property owners and removes the need for a separate exemption provision.

The Bill also increases the congestion levy rates for 2026, setting them at $3,030 for category 1 levy areas and $2,150 for category 2 levy areas, with annual CPI adjustments from 2027 onwards. Additionally, the category 2 levy area is expanded, and the map of levy areas will now be published online by the Commissioner of State Revenue, improving transparency and accessibility for affected businesses.

The new rules introduce exemptions and concessions:

• Parking spaces at government schools and boarding premises are exempt from the levy if provided free of charge.
• Parking spaces set aside exclusively for retail customer parking in the category 2 area receive a 50% concession if provided free for the first hour or to customers making a purchase.

Finally, the Bill imposes new registration requirements for owners and operators of car parks in the expanded levy area, with clear deadlines for registration to ensure proper administration and compliance.

Duties Act 2000

New Zealand citizens

A key amendment relates to New Zealand citizens and the foreign purchaser additional duty. Previously, the exemption for New Zealand citizens was based on holding a ‘special category visa’, which could lead to inconsistent outcomes depending on whether the individual was physically present in Australia at the time of settlement.

The Bill replaces this with a new residency test. The provisions outline that New Zealand citizens will only be exempt from the foreign purchaser duty if they ordinarily reside in Australia for at least six months within a defined period around the transaction. This change ensures that the exemption is available to genuine residents and closes a loophole that allowed non-residents to avoid the surcharge.

Custodian transfers

The Bill also introduces a new exemption for transfers of dutiable property involving custodians and sub-custodians under a trust. This addresses practical issues in trust administration, where property may need to be transferred between different custodians or trustees without any change in beneficial ownership. The exemption applies only to ‘internal’ transfers within a pre-existing and continuing trust, and not to transfers that alter the beneficial interests.

Tax reform scheme land

Further amendments to the Duties Act clarify the treatment of ‘entry interests’ for land entering the CIPT reform scheme. The Bill sets out new rules for calculating the quantum of an entry interest when a transaction is subject to a duty exemption or concession (other than certain reductions), ensuring that only the portion of the interest on which duty was actually paid is counted. This prevents anomalous outcomes where nominal duty could result in a larger interest being recognised for tax reform purposes.

Land Tax Act 2005

The Bill introduces several significant changes to the Land Tax Act 2005, with a focus on integrity and fairness of Victoria’s land tax regime.

The Bill substitutes the definition of a ‘natural person absentee’ to introduce a new requirement that a person who is not an Australian citizen or resident will be an absentee if they were absent from Australia for a total of 6 months during the previous calendar year.

New Zealand citizens

One of the most notable amendments is the introduction of a residency test for New Zealand citizens in relation to the absentee owner surcharge. Previously, New Zealand citizens could avoid the surcharge simply by being present in Australia on 31 December, regardless of their actual residency status. The Bill now requires that only New Zealand citizens who ordinarily reside in Australia will be exempt from the absentee owner surcharge, closing a loophole and ensuring that the surcharge applies more equitably.

Temporary residences

The Bill also creates a new exemption for land with temporary residences with the introduction of new sections 63A to 63H. This exemption is designed to support individuals who use temporary residences as their principal place of residence. Under the new legislation, a temporary residence is defined as any structure or vehicle that is capable of being used for habitation and for which an occupancy permit is not required. The Bill outlines that caravans, motorhomes, trailers, tents, sheds, and barns are examples of temporary residences.

The Bill outlines land will be ‘temporary residence land’ if:

• there is a temporary residence on the land
• there is no building affixed to the land for which an occupancy permit is required (including a building under construction or renovation)
• the land is not used by any person to carry on a substantial business activity
• the land is in a zone other than a non-residential zone
• the taxable value of the land is less than $300,000
• the owner of the land does not own any other land in Victoria.

The new provisions apply only if a natural person or vested beneficiary uses and occupies the property as their principal residence, and they preclude the exemption from applying if rent is paid by or on behalf of the vested beneficiary for use and occupation of the land.

This change recognises the diversity of living arrangements in Victoria and provides relief to those who might otherwise be unfairly taxed.

Vacant residential land tax

The Bill makes several targeted changes to the vacant residential land tax (VRLT) provisions.

Firstly, the definition of ‘alpine resort’ is expanded to include land located within the Dinner Plain locality, meaning residential land in Dinner Plain will be excluded from VRLT, recognising its seasonal nature similar to other alpine resorts.

Secondly, the deadline for owners to notify the Commissioner about vacant residential land and to apply for exemptions is moved from 15 January to 15 February each year, giving property owners additional time to comply with their obligations.

Thirdly, a new exemption is introduced for properties that were residential land at both the start and end of the preceding year but were not residential land for a period during that year, such as when a home is undergoing significant renovations or repairs. This ensures owners are not unfairly taxed when their property is temporarily uninhabitable due to genuine works.

Hardship

The hardship relief provisions have also been updated. The threshold for applications for hardship relief from land tax liability has been increased from $1,000 to $5,000, making relief accessible to a broader group of taxpayers. Importantly, the requirement for Treasurer approval has been removed, streamlining the process and allowing the Commissioner of State Revenue to grant relief directly.

Other changes

The Bill also introduces changes to the First Home Owner Grant and Home Buyer Schemes Act 2000, expanding eligibility for New Zealand citizens. Under the new provisions, New Zealand citizens can qualify for the First Home Owner Grant based on residency, rather than visa status, ensuring fairer access for genuine residents. The Bill also modernises administrative processes by clarifying when electronic service of documents is considered effective.

In relation to the Building Act 1993, the Bill clarifies and strengthens the calculation of building permit levies, particularly for cost-plus contracts, and requires more accurate reporting of building costs. It validates past estimates and calculations to prevent disputes and ensure certainty for builders and property owners. Additionally, consequential amendments are made to related Acts to align with the new calculation methods, supporting a more robust and transparent building permit levy system.

How SW can help

SW’s state tax specialists can help you interpret the new rules, assess your exposure, and optimise your position under the amended legislation. These changes are significant, affecting property, land tax, congestion levies, building permits, and more, and may have a direct impact on your property, business, or compliance obligations. Understanding the amendments is crucial to ensure accurate planning, avoiding unexpected liabilities, and taking advantage of available exemptions or concessions.

Contact your SW advisor to discuss how these changes may affect you and ensure you are well-prepared under the updated legislation.

Key contacts

William Zhang

Robert Parker

Blake Trad

The post Victoria’s State Taxation Further Amendment Bill 2025: What you need to know appeared first on SW Accountants & Advisors.

Usual Land Tax Assessment process

Each Council/Shire engages a Licensed Valuer for the purpose of valuing each property in their municipality in respect of:

1. The Capital Improved Value (CIV) – Land plus any improvements
2. Site Value/Unimproved Land Value – Land Only

If you conduct any building activity including obtaining certain permits, the council/shire can issue an Amended Rates Notice at any time.

The Council/Shire will declare a range of rates during their annual budgeting process that will then been multiplied usually by the CIV to determine the annual council/shire rates payable by the land owner.

The rates will vary depending upon the use and the relevant planning scheme that applies to the land. For instance there will generally be different rates per dollar for:

1. Residential Land containing a dwelling
2. Vacant Residential Land
3. Industrial Land
4. Vacant Industrial Land
5. Farm Land
6. Native Vegetation etc.

Objecting a Council/Shire Rates Notice

You usually have 60 days to object to a Council/Shire Rates Notice from the issue date, with most objections being:

• Inappropriate valuation
• Assessed area being incorrect
• Incorrect classification/rate applied
• Property no longer owned etc.

The Council/Shire then provides the following two values to the SRO:

1. Site Value – used to produce the Land Tax Assessments
2. CIV – used to calculate Vacant Residential Land Tax

The 2025 Land Tax Assessments take into account land held at midnight on 31 December 2024 and use the value as prepared by councils in 2024.

Is your Land Tax assessment correct?

You also have 60 days to object to a Land Tax Assessment from the issue date.

In addition, as Land Tax is a self-assessment system you need to consider whether:

1. all the land you or the entity owns is included and the apportionment is correct
2. dimensions and description of the land being valued are correct
3. is any land which you have bought/sold disclosed?
4. if you receive multiple assessments for the same own – for instance individuals name may be spelt wrong etc
5. any exemptions are correctly applied – for instance primary production land, principal place of residence, exempt status etc
6. whether Absentee Owner Surcharge should be or should not be charged
7. whether any Vacancy Residential Land Tax has been correctly assessed
8. land subject to the Trust surcharge has been correctly assessed
9. correct ownership is disclosed – trust as opposed to company etc.

It is often easier to object against the Council Rates Notice  as in essence this information is then fed through to the SRO.

Where the valuation is not appropriate, it is prudent to obtain supporting evidence which in many cases will  include a formal Valuation from a Property Valuer to support a lower and correct valuation.

There is a cost/benefit assessment to be done when lodging an objection.

How SW can help

To assist you we can:

• review the Land Tax Assessments to ensure that you are correct – remembering that it is a self-assessment system
• consider whether the Site Value is appropriate and if not consider lodging an objection.

The post Land Tax Assessments 2025 | What you need to know appeared first on SW Accountants & Advisors.

From the 2025 land tax year (1 January 2025), the NSW Government will increase the rate of the foreign purchaser duty surcharge from 8% to 9%.

The foreign resident duty surcharge is levied on foreign buyers of residential property in NSW, with various exemptions available. This includes Australian incorporated property developers (and trustee companies) being able to seek a refund of the surcharge paid within 12 months of a sale of a home on residential land or sale of a residential lot, if the land has been held for less than 10 years.

From January 2025, the NSW Government will also increase the surcharge rate of land tax applied in addition to land tax rates for foreign persons, foreign companies, trustees of foreign trusts, from 4% to 5%.

Existing exemptions continue to be available from the land tax surcharge, including Australian developers being able to seek a refund (where eligibility requirements are met).

For further information we have released a summary about the different state foreign owner surcharge land taxes and duties.

How can SW help?

SW has considerable experience in assisting foreign investors to determine the most favourable state or territory to invest in property developments. This includes advising on refunds or exemptions for property developers, build-to-rent concessions, the availability of exemptions and ex gratia relief from surcharges, and the specific advantages and disadvantages of different property assets.

If you would like any further information, please contact a member of the SW tax team.

Contributors

Robert Parker

Eric Lay

The post NSW Budget | foreign owner duty & land tax surcharges appeared first on SW Accountants & Advisors.

The Queensland Government will increase the rate of the additional foreign acquirer duty (AFAD) from 7% to 8% from 1 July 2024,

AFAD is levied on foreign buyers of residential property in Queensland, with ex gratia relief offered to Australian-based foreign entities whose commercial activities involve significant developments by adding to the supply of housing stock in Queensland (subject to eligibility requirements).

From July 2024, the Queensland Government will also increase the surcharge rate of land tax applied in addition to land tax rates for foreign companies, trustees of foreign trusts and absentees, from 2 %to 3%.

Ex gratia relief from the land tax surcharge will continue to be offered for Australian-based foreign entities whose commercial activities make a significant contribution to the Queensland economy and community (subject to eligibility requirements).

For further information we have released a summary about the different state foreign owner surcharge land taxes and duties.

Concluding remarks

While the increased rate of the AFAD will bring Queensland in line with Victoria and New South Wales’ foreign owner transfer duty surcharge rates, Queensland’s increased foreign owner land tax surcharge will still be more generous than other states.

How can SW help?

SW has considerable experience in assisting foreign investors to determine the most favourable state or territory to invest in property developments. Given foreign owner transfer duty surcharge rates are becoming more uniform across Australia, it may become less clear what are the specific advantages in investing in specific states and territories. However, other drivers that are still relevant to structuring foreign investments in specific states and territories include build-to-rent concessions, the availability of exemptions and ex gratia relief from surcharges, and the types of property assets that will be invested in.

If you would like any further information, please contact a member of the SW tax team.

Contributors

Eric Lay

The post QLD Budget | Foreign owner duty & land tax surcharge appeared first on SW Accountants & Advisors.

政府兑现了承诺，将 VRLT 度假屋豁免扩大适用至公司和信托持有的土地。根据目前议会正在审议的《2024年州税修正案》，在 2023 年 11 月 28 日之前持有家庭度假屋的公司和信托将能申请豁免，与个人申请豁免基本相同。

在 2024 年 12 月 31 日之前要及早思考并实施任何紧急措施，以确保在下一轮评估中取得预期成果。

空置住宅土地税（VRLT）回顾

全维多利亚州的居住用地

VRLT 指：

· 对被认定为在一个自然年内“空置 ”超过 6 个月的维多利亚州住宅物业征收的年度物业税

· 其目前适用于墨尔本内城区的土地，但从 2025 年 1 月 1 日起，其将适用于维多利亚州全境的住宅物业

· 此外，还需缴纳州土地税和联邦年度空置费

· 目前税率为土地资本改良价值的 1%，而如果土地连续三年需要缴纳 VRLT，税率就可能会提高到 3%。

如果业主所拥有的居住用地在上一个自然年内空置超过 6 个月，则应在 1 月 15 日之前通知州税局。

未改良的居住用地

自 2026 年 1 月 1 日起，VRLT 将适用于墨尔本大都会区内所有至少 5 年未开发且可用于住宅开发的未改良居住用地。

度假屋豁免有哪些变化？

VRLT 度假屋豁免是本事务所客户最热议的话题。在该法案提出之前，度假屋豁免主要只适用于个人住宅业主，不包括信托和公司持有的物业。这引起了业主们极大的关注，因为通过公司和信托持有度假屋以达到资产保护和其他目的的做法很常见。

在该法案项下提出的修正案应能纠正当前的问题，并为维多利亚州的业主们提供一些减免，此为得民心之举，但根据草案中的资格标准，通过公司和单位信托持有的度假屋也许只能获得有限的减免。

公司和信托的资格标准

对于在维州拥有度假屋的公司和信托公司，如果满足以下条件，则可免征 VRLT：

a. 业主在 2023 年 11 月 28 日持有度假屋，或在该日期之后根据 2023 年 11 月 28 日或之前订立的合同购得该物业，且业主自此一直持有该物业

b. 自 2023 年 11 月 28 日以来，土地业主的股权或实益权益没有发生变化，除非相关变化涉及亲属

c. 若为土地业主公司或单位信托，则需要由一人或多人在该公司或信托至少持股50%，而且这些人要在澳大利亚拥有另一处以主要居住地（PPR）为用途并居住的物业。对于拥有土地的家族全权信托，指定受益人或亲属必须曾经在澳大利亚把另一块土地用作PPR并居住。

d. c 段所述个人在一个自然年内将土地用作度假屋并居住的时间至少达到 4 周。

e. 州税专员在考虑了土地的位置、土地与相关个人的 PPR 之间的距离以及土地使用的性质和频率后，确信土地是作为度假屋使用并居住的。

通过公司和单位信托持有的住房面临的挑战

公司和单位信托持有的度假屋面临的挑战是，要获得豁免资格，至少 50%的公司股份或信托单位需由个人直接持有。一般来说，股份或单位是通过全权信托持有的，而不是由个人直接持有。因此，这些公司和单位信托将不符合豁免条件。澳大利亚房地产理事会已将这一限制通知政府，希望政府能重新审视这一立场。

连续性土地

对于有资格申请度假屋豁免的业主，他们还可以就其拥有的与度假屋相邻的、仅用于度假屋使用和居住者的私人利益和享受的任何土地（例如网球场和游泳池）获得 VRLT 豁免。这项豁免适用于在墨尔本大都会区拥有度假屋和连续性土地（产权分开）的业主，因为从 2025 年 1 月 1 日起，墨尔本大都会区内的空置土地未改良 5 年或以上的，需缴纳 VRLT。

信永中和如何帮助您

维多利亚州度假屋业主应仔细考虑上述变化以及任何适当行动，以充分利用现有的相关豁免。在 2024 年 12 月 31 日之前要及早思考并实施任何紧急措施，以确保在下一轮评估中取得预期成果。

我们的州税务专家可以为您提供关于VRLT和任何豁免资格的适当建议和协助。

The post 涉及公司和信托的空置住宅土地税新动态 appeared first on SW Accountants & Advisors.

The Government has delivered on its promise to extend the VRLT holiday home exemption in relation to land held by companies and trusts. Companies and trusts which held a family holiday home before 28 November 2023 will be able to access the exemption in substantially the same way as individuals under the State Taxation Amendment Bill 2024 currently before Parliament.

Any action needs to urgently be considered and implemented well ahead of 31 December 2024 to ensure the desired outcome in the next round of assessments.

Recap on Vacant residential land tax (VRLT)

For residential land across all of Victoria

The VRLT is:

• a yearly property tax imposed on residential properties in Victoria that are deemed ‘vacant’ for more than six months in a calendar year
• it currently applies to land in inner Melbourne areas but from 1 January 2025 it will apply to residential properties throughout Victoria
• it is in addition to any state land taxes and federal annual vacancy fee that are payable
• currently at 1% of the capital improved value of the land and can rise to 3% where the land is liable for VRLT three years in a row.  

Owners are required to notify the SRO by 15 January if they own residential land that has been vacant for more than 6 months in the preceding calendar year.

Unimproved residential land

From 1 January 2026, VRLT will apply to all unimproved residential land in metropolitan Melbourne that has remained undeveloped for at least 5 years and is capable of residential development.

What is the change to the Holiday home exemption?

The exemption for holiday homes under VRLT has been the most topical with our clients. Prior to the Bill, the holiday home exemption was largely available only to individual home owners, not including properties held by trusts and companies. This caused significant concern among property owners as it is common to hold holiday homes through companies and trusts for asset protection and other purposes.

The amendments proposed under the Bill should rectify the current issue and provide Victorian property owners some welcomed relief, however it may only provide limited relief to holiday homes held through companies and unit trusts due to the drafted eligibility criteria.

Eligibility criteria for companies and trusts

For companies and trusts that own holiday homes in Victoria, an exemption from VRLT is available if the following conditions are met:

1. The owner held the holiday home on 28 November 2023, or acquired the property after that date under a contract which was entered into on or before 28 November 2023, and the owner has continuously held it since that time
2. There has been no change in the shareholding or beneficial interest in the land owner since 28 November 2023, unless the change involves persons who are relatives of one another
3. There needs to be a minimum ownership interest of 50% in land owning companies or unit trusts by one or more individuals who have another property in Australia that they use and occupy as their principal place of residence (PPR). For a land owning family discretionary trust, a specified beneficiary or a relative must have used and occupied other land in Australia as a PPR.     
4. The land has been used and occupied as a holiday home for a period of at least 4 weeks in a calendar year by an individual referred to in paragraph c.
5. The Commissioner of State Revenue is satisfied that the land is used and occupied as a holiday home, taking into account the location of the land, the distance between the land and the PPR of the relevant individuals and the nature and frequency of the use of the land.

Challenge for homes held through companies and unit trusts

The challenge for holiday homes held in companies and unit trusts is that to qualify for the exemption, at least 50% of the shares in the company or units in the trust needs to be held directly by an individual. Generally, shares or units are held through discretionary trusts, rather than directly by the individual. Therefore, these companies and unit trusts would not be eligible for the exemption. The Property Council of Australia has notified the Government of this limitation in hopes that Government will review this position.

Contiguous land

For owners eligible for the holiday home exemption, they could also receive an exemption from VRLT for any land that they own that is adjoining to the holiday home and used solely for the private benefit and enjoyment of the person who uses and occupies the holiday home (for example, tennis courts and swimming pools). This exemption is relevant for owners with holiday home and contiguous land (on separate title) located in metropolitan Melbourne because from 1 January 2025, vacant land within metropolitan Melbourne  left unimproved for 5 years or more becomes liable for VRLT.

How SW can help

Owners of holiday homes in Victoria should carefully consider the above changes and any appropriate actions to take full advantage of the relevant exemptions that are available. Any actions needs to urgently be considered and implemented well ahead of 31 December 2024 to ensure the desired outcome in the next round of assessments.

Our state tax experts can provide you with appropriate advice and assistance in relation to VRLT and any eligibility for exemption.   

Contributors

William Zhang

Robert Parker

The post Vacant residential land tax update – companies and trusts appeared first on SW Accountants & Advisors.

VRLT will continue to be payable at 1% of capital improved value of residential property that has been vacant for at least 6 months in a calendar year. The change will take effect from 1 January 2025, effectively capturing land which is vacant for more than 6 months during 2024. VRLT will also expand to apply to residential land that remains undeveloped for five years or more from 1 January 2026.

The existing exemptions for holiday homes and properties being renovated will remain in place. Developers that currently hold vacant land will receive a two-year extension, if they have received a building permit in the initial five-year period in which the land is vacant.

The State Revenue Office (SRO) will have the power to extend the five-year period in certain circumstances that are beyond the control of the developer.  The SRO will also have considerable discretion to determine exemptions.

Underlying reasons for the changes

These changes come as part of the government’s push to meet its target to build 80,000 extra homes per year.

The changes look to put pressure on Victorian owners of vacant homes and land to make the homes available for rent or sale and develop vacant land. This much was confirmed in Treasurer Tim Pallas’ speech to the Property Council in which he stated that the “clear message to landowners is to either develop land or sell it to someone who will”.

Impacts

The impacts of the current and new measures are outlined as follows:

In focus

Statewide expansion from 1 January 2024

• references to a ‘specified geographic area’ will be removed from the Land Tax Act 2005, allowing the VRLT to be expanded to include all vacant residential property statewide
• the current exemptions will still apply
• the tax rate will remain at 1 per cent.

Undeveloped land from 1 January 2025

The VRLT will apply to vacant residential land that has been vacant for 5 years or more if the land is:

• within a municipal district of a Council listed in the new Schedule 2B (essentially all Melbourne Metropolitan local government areas), and
• within a zone other than a ‘non-residential zone’ (these  are based on AVPCC numbers specified in the Bill), and
• not solely or primarily used for or under development for a non-residential use.

This 5-year period will apply in instances where the land has had the same ownership during the 5 year period.

Land is under development for a non-residential use if:

(a) an application is made for a permit 10 under the Planning and Environment Act 1987 in relation to the use or development of the land for a non-residential use; or

(b) a request is made under the Planning and Environment Act 1987 for an amendment to a planning scheme that would authorise a non-residential use of the land; or

(c) an application is made for a permit or 20 approval under the Building Act 1993 in relation to the use or development of the land for a non-residential use.

Exemptions from the VRLT is available for:

• land contiguous to land used as a principal place of residence where it has the same owner
• land that cannot be developed for residential purposes due to its physical attributes, or where a matter prohibits lawful use or development, such as a restrictive covenant or environmental orders.

Commissioner discretion

• The Commissioner of State Revenue will be granted significant discretion to grant exemptions from VRLT if:
  • Land is intended to be solely or primarily used or developed for non-residential use; and
  • There is an acceptable reason for the land not yet being used or developed in that way.
• The Commissioner has the power to determine that land is ‘not vacant’ if a residence is to be constructed and there is an acceptable reason that this has not commenced.
• The Commissioner may impose the VRLT under its discretion if the land is deemed to have been transferred with the intention of receiving a reduction or exemption.

Full details are outlined in the Bill which is currently before parliament and the accompanying Explanatory Memorandum.  Debate on the Bill will resume later this month, with it being likely that the Bill moves to the Legislative Council in November.

How SW can help

Reach out to our state taxes experts if you would like to discuss the potential impact of these changes on your current or future property or land holdings. The SW team can also assist with applying to the Commissioner for exemptions, where applicable.

Contributors

Robert Parker

Blake Trad

The post Government announces expansion of vacant residential land tax in Victoria appeared first on SW Accountants & Advisors.