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Significant changes to Victorian land tax assessments to result in higher land tax bills

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Land tax assessments are now being issued in Victoria, with landowners finding their land tax bills to be substantially higher than expected, due to significant changes from 1 January 2024.  Hundreds of thousands of taxpayers will also be receiving land tax assessments for the first time altogether.

What is changing

Land tax is payable annually on the unimproved land value of properties.  From 1 January 2024, new surcharges will apply and land tax rates will be higher for all taxpayers.

New surcharges to result in higher land tax

For individuals and companies, the tax-free threshold will drop from $300,000 to $50,000.

Higher land tax rates will apply above the new threshold.

Land tax general rates (from 2024 land tax year)

 

Land Value

Land Tax

Less than $50,000

N/A

$50,000 – $100,000

$500 p.a. land tax (previously no land tax)

$100,000 – $300,000

$975 p.a. land tax (previously no land tax)

Greater than $300,000

Extra $975 p.a. plus land tax rates increased by 0.10%

$300,000 to < $600,000

$1,350 plus 0.3% of amount > $300,000

$600,000 to < $1,000,000

$2,250 plus 0.6% of amount > $600,000

$1,000,000 to < $1,800,000

$4,650 plus 0.9% of amount > $1,000,000

$1,800,000 to < $3,000,000

$11,850 plus 1.65% of amount > $1,800,000

$3,000,000 and over

$31,650 plus 2.65% of amount > $3,000,000

Increase to top rate of land tax

The top rate of land tax therefore increases from 2.55% to 2.65% (for land valued above $3 million).

For land held in trusts, the trust surcharge rates of land tax will continue to apply on top of the changes above (for land valued below $3 million).

Higher land tax rates for foreign individuals, companies, and trusts

From 1 January 2024 – the foreign surcharge for land tax will increase from 2% to 4%.

This is the “absentee owner surcharge” and applies for foreign owners of land (including absentee individuals, absentee corporations and trustees of absentee trusts).

That means that the top marginal rate of land tax in Victoria will now be 6.65%.

Action required

These changes are estimated to impact almost one million taxpayers, with the lower land tax threshold predicted to capture an additional 360,000 new taxpayers of whom have not previously been required to pay land tax.

Taxpayers should:

  • review land tax assessments to ensure that they correctly record properties and ascribe land values;  

  • document usage of land to substantiate claims for exemptions; and

  • object where there are valid grounds (noting that objections must be made in writing and lodged with the SRO within 60 days from the date of service of the notice of assessment).

Please contact us with any questions on land tax or any other State Tax issues.

Phil Broderick
Principal
T +61 3 9611 0163  l M +61 419 512 801  
E pbroderick@sladen.com.au    

Nicholas Clifton
Principal Lawyer
T +61 3 9611 0154 | M +61 401 150 955
E nclifton@sladen.com.au

Meera Pillai
Associate
T +61 3 9611 0179
E mpillai@sladen.com.au

Nicholas Clifton