The State Government has introduced a new bill to State Parliament to implement changes from the 2025-2026 Victorian State Budget. Despite a promise of no new taxes or increased taxes, a new 50% penalty tax rate allows the State Revenue to impose higher penalties if it considers a taxpayer or their adviser has been “reckless”.

Under the State Taxation Acts Amendment Bill 2025 (Vic), the Taxation Administration Act 1997 (Vic) will be amended to include a new penalty tax of 50% of the “tax unpaid” if the default was caused wholly or partly by recklessness by the taxpayer (or a person acting on behalf of the taxpayer). This includes notification defaults.

Currently there are a 25% penalty tax for failure to take reasonable care or 75% penalty tax for an intentional disregard of the law. These are reduced to 5% to 15% for voluntary disclosures before an investigation.

Victorian land tax and stamp duty is notoriously hard for ordinary taxpayers to fully comply with their obligations. For example, separate notifications are required for a taxpayer buying land in a trust, foreign persons (including Australian locals who have not amended a trust deed to expressly exclude foreign persons) or other foreign persons buying land. Many taxpayers struggle to understand these rules or even know to search for the rules in the first place.

There is a real risk that the State Revenue Office will consider the 50% penalty tax rate to be the default penalty to apply.

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Please contact us with any questions on 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