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.

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

The post Victoria’s State Tax Reform 2025: What Property Owners, Developers & Advisors Need to Know appeared first on SW Accountants & Advisors.

The State Taxation Further Amendment Bill 2024 (the Bill) received Royal Assent on 3 December 2024.

The key changes proposed by the Bill include:

• further duty exemptions for land in the Commercial and Industrial Property Tax (CIPT) Scheme
• reinforcement of the existing Foreign Purchaser Additional Duty (FPAD) and Absentee Owner Surcharge (AOS) provisions and
• a new land tax exemption for charitable housing providers.

Other amendments to payroll tax and other minor exemptions have also been proposed. We have unpacked these major state taxation changes below.

Key changes explained

Further Commercial and Industrial Property Tax (CIPT) exemptions

The CIPT scheme was introduced to replace stamp duty for future transactions involving commercial and industrial properties that have entered and continue to qualify under the scheme (referred to as CIPT Land). For further details take a look at our webinar or article on CIPT.

Under the newly introduced framework, stamp duty is intended to be levied one last time when a property enters the CIPT scheme through an initial qualifying transaction (‘entry transaction’).  

Despite inclusion into the CIPT scheme, certain subsequent transactions (‘non standard transactions’) involving dutiable leases, fixtures and economic entitlements remain subject to duty.

The Bill introduces changes to provide upfront exemptions and concessions for ‘non-standard transactions’ which are defined as transactions such as the grant, transfer, or surrender of dutiable leases, or the acquisition of fixtures or economic entitlements related to CIPT Land.

Non-standard transaction exemptions

These ‘non-standard transactions’ will be exempt from duty if one of the following applies:

• at least three years have passed since the land entered the CIPT scheme, and the non-standard transaction agreement is made after this period or
• the entry transaction involved a 100% interest in the land, or the total interests transacted in the land amount to 100% and
• the value of the CIPT land when it entered the CIPT regime was not reduced by a lease over the land, economic entitlement in relation to the land and did not exclude the value of an interest in fixtures on the land.

The above upfront exemption is aimed at circumstances where appropriate duty has previously been paid as part of the land entering the CIPT.  

Where full duty has not been paid, the Commissioner may exercise discretion to waive or reduce the duty payable on these transactions. The Commissioner considers:

• the proportion of the initial interest acquired during the entry transaction and any additional interests subsequently acquired in the land
• the degree to which the land’s value was diminished by other interests, such as leases, economic entitlements, or excluded fixtures, at the time the entry transaction was assessed for duty
• the time interval between specific transactions related to the land
• any other factors the Commissioner deems relevant.

Foreign Purchaser Additional Duty (FPAD) & Absentee Owner Surcharge (AOS) provisions

Under the Duties Act 2000 (Vic), FPAD applies extra taxes on the acquisition of residential land by foreign purchasers in Victoria. Similarly, under the Land Tax Act 2005 (Vic), the AOS imposes additional taxes on foreign owners holding land in Victoria.

The amendments are intended to address the risk that the existing provisions were invalid by reason of an inconsistency with theInternational Tax Agreements Act 1953 (Cth), which gives force to certain non-discrimination clauses in international tax treaties.

The Commonwealth Act was amended to explicitly state that state taxation laws override these international tax agreements in cases where these is an inconsistency. Despite this clarification, there remains a risk that courts could find the historical application of the FPAD and AOS invalid if they are deemed inconsistent with the Commonwealth law as it was at the time the alleged tax liabilities were incurred.

The new proposed provisions outline that if an FPAD or AOS liability is found to be invalid because of an inconsistency, a new replacement tax will be imposed which will mirror the original liability.

The proposed amendments will have the following practical effect, notwithstanding that the amendments will not apply if the liabilities are determined to be valid:

• if the FPAD or AOS liability between 1 January 2018 and 8 April 2024 are deemed invalid, the taxpayer will still owe the same equivalent amount under the new provisions and
• in circumstances where the taxpayer has paid the FPAD or AOS liability, the previous payment of the invalid tax will satisfy their liability under the replacement tax.

These proposed amendments ensure that the Victorian taxes are imposed as they were intended.

Exemption for charitable housing providers

The proposed changes under the Bill create a new exemption under section 78D of the Land Tax Act 2005 (Vic) (Housing provided for the relief of poverty) which applies to land owned, managed, or controlled by a charitable institution that is occupied, or available for occupation, by residents solely in connection with the institution’s charitable purpose of relieving poverty.

The new exemption is also available to vacant land owned by a charitable institution and declared to be held for such future use and occupation. However, the caveat to this is that the Commissioner must be satisfied that the land will be exempt land within 2 years, or a period longer as approved by the Commissioner.

As is the case with other land tax exemptions, the exemption may apply on a partial basis if the Commissioner is satisfied that only a part of land is land that meets the exemption requirements. Land tax will remain assessable on the part of the land that is not exempt.

How SW can help

Contact one of our state taxes experts to discuss how the proposed amendments may impact you.

Contributors

William Zhang  

Blake Trad 

Robert Parker

The post Key VIC changes introduced by the State Taxation Further Amendment Bill 2024 appeared first on SW Accountants & Advisors.

This new concession is set to last for 12 months and attempts to address ongoing challenges in the Victorian property market, particularly amid high construction costs and interest rates which impact both supply and demand of residential properties. 

How does it work?

The concession allows purchasers to deduct construction costs incurred after the contract date from the dutiable value of their property, potentially reducing the stamp duty owed. Unlike the existing concessions, this one will be open to all purchasers, including investors, companies, and trusts—not just first-home buyers or owner-occupiers. The concession is available only for contracts entered into between 21 October 2024 for 12 months ending 21 October 2025.  

Who benefits? 

• Investors: With the concession extending to investors, who can acquire the property as individuals or via companies and trusts, it could attract more property investments.  

• Developers: This could incentivise more off-the-plan projects by helping drive pre-sales, which are critical for securing project financing. The reduced stamp duty may make such developments more appealing to a broader buyer base, providing developers with the upfront sales needed to get projects off the ground. 

• Buyers: This will offer significant savings for buyers in strata developments, addressing affordability issues as housing demand continues to outstrip supply. 

Potential challenges: 

• Limited scope: The concession only applies to strata subdivisions. House-and-land packages and other property types are excluded. 

• Foreign purchasers: While foreign buyers benefit from the concession, they will still face the additional Foreign Purchaser Additional Duty (FPAD) which could temper the overall savings for them. 

• Limited project pipeline: With ongoing challenges such as rising construction costs and town planning delays, there are relatively few projects ready to be released to the market over the next 12 months. This may lead to developers rushing incomplete or financially unviable projects to market just to take advantage of the concession. The risk? Some of these projects may never get off the ground, potentially causing complications for purchasers. 

Overall, while this temporary concession is a positive step towards stimulating residential property development and easing affordability concerns in Victoria it may not provide enough time to drive substantial change in the property market. The property cycle takes several years to recover to market peak. In Victoria, previous off-the-plan concessions lasted from 2008 to 2017 and gave the market a nine-year window to benefit. That extended timeframe allowed developers and buyers to adapt and maximise the opportunities. In comparison, this shorter concession period might not allow for the same level of market stimulation, limiting its overall impact on increasing housing supply and improving affordability.  

How SW can help 

At SW, our property and stamp duty experts can provide the off-the-plan duty concession analysis and advice to help clients identify the most suitable concession method for their project to achieve the optimal duty outcome for their buyers.   

We can also prepare reports and forecasts taking into account the impact of the concession to assist clients in negotiating better terms with banks and financiers.   

Please contact us if you have any questions in relation to the above.  

Contributors 

Blake Rodgers 

William Zhang  

The post New temporary off-the-plan duty concession appeared first on SW Accountants & Advisors.

On 27 August 2024, the Victorian Government released the Short Stay Levy Bill 2024 (Vic). The Bill introduces a levy of 7.5% on booking fees for providers of short stay accommodation from 1 January 2025. This follows the Government’s announcement in September 2023 to introduce a levy as part of its Housing Statement.

The policy aims to increase the supply of long-term rental housing, with revenue from the levy helping to fund Homes Victoria to build social and affordable housing across Victoria (25% of funds are set to be invested in regional Victoria).

The levy

The levy of 7.5% of the total booking fee (including GST) will be payable for each short stay of less than 28 days in Victorian premises that are short stay accommodation.

The levy will be imposed on all bookings made from 1 January 2025. The levy does not apply to a short stay booking made before 1 January 2025, regardless of whether the short stay is completed on or after 1 January 2025.

Short stay accommodation

Short stay accommodation covers any accommodation other than the principal residence of an owner or renter, commercial residential premises (e.g. hotel, motels, caravan parks etc) and certain care and support facilities.

Premises with more than one use can also qualify as short stay accommodation. The levy will be imposed on the part of the property used as short stay accommodation.

Who will be impacted?

Online and offline booking platforms, owners or renters of short stay accommodation are liable for the levy.

The liability for the levy will arise on the completion of a short stay.

Lodgement and registration obligations

Providers of booking platforms, owners or renters accepting bookings for short stays must apply to the Commissioner for registration and lodge returns every calendar year to pay the short stay levy.

Returns must be lodged every 3 months for persons whose total relevant booking fees in a year are $75,000 or more.

Planning and development

Owners’ Corporations can ban short stays in their strata scheme.

There will also be changes to planning systems to allow local councils the power to regulate short stay accommodation.

Details of these changes are yet to be finalised.

How SW can help

Online platforms such as Airbnb and property owners offering short stays should consider the impact of the provisions outlined in the Bill and their reporting and payment obligations in early 2025.

SW can assist in determining whether your premises will be subject to the levy and with registering and lodging returns.

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

Contributors

William Zhang

Carmelin De Francesco

Blake Trad

The post Victorian Government introduces 7.5% short stay levy to Parliament 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.

Key takeaways

• Focus on hospitals and schools.
• Health spending is 31% of the 2024-25 budget’s operating expenses.
• Infrastructure spending program has an added $4.9bn for targeted new investments in critical areas.
• The already announced Commercial and Industrial Property Tax (CIPT) regime is on the horizon.
• Delay of Airport Rail link.
• Payroll Tax threshold to be lifted to “make things easier” for small business.

What does the State Budget mean for you?

Property & infrastructure

Payroll Tax

Contributors

William Zhang

Blake Rogers

The post VIC State Budget 2024/25 appeared first on SW Accountants & Advisors.

The session will cover the following topics:

• should you enter into agreements before or after 1 July 2024
• details on how the new CIPT regime will work
• impact on direct and indirect property acquisitions
• what exemptions apply
• the interaction between the CIPT and stamp duty (including landholder duty, lease duty and economic entitlements)
• impact on current projects
• who are the Winners and losers

Event details

Date

Wednesday 17 April 2024

Location

Online or in person at the SW Melbourne office, Level 10, 530 Collins Street, Melbourne

Time

12.30pm – 1:30pm (AEDT)

SW Speakers

Abi Chellapen
Director
SW

Stephen O’ Flynn
Director
SW

Blake Rodgers
Associate Director
SW

Robert Parker
Consulting Director
SW

Contact us

If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

The post Commercial and Industrial Property Tax Reform webinar 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.