If you own property in Victoria, you may have to pay land tax.
From 1 January 2016, an absentee owner surcharge applies to Victorian land owned by an absentee owner. This surcharge will increase from 0.5 per cent to 1.5 per cent from 1 January 2017.
The absentee owner surcharge is an additional amount that applies over the land tax you pay at general and trust surcharge rates.
You must tell us if you are an absentee owner. This is important. Penalties may apply if you don’t tell us.
What is an absentee owner?
An absentee owner is an absentee person that owns land.
An absentee person is one of the following:
Each of these terms has a specific meaning. You should refer to each term for further information to see if the absentee owner surcharge applies to you.
When will the surcharge apply?
If you are an absentee owner at 31 December, the surcharge will apply in the following land tax year.
The surcharge is calculated on the total taxable value of Victorian land you own and will be included in your Victorian land tax assessment. Depending on how and who owns the land, the surcharge also applies to jointly owned land.
The surcharge does not apply if land is exempt from land tax or if the total taxable value of your land(s) is below the threshold.
If your land attracts special land tax, you’ll pay an absentee owner flat rate of 5.5 per cent, increasing to 6.5 per cent from 1 January 2017.
Tell us if you’re an absentee owner
If you have already told us you are an absentee owner you do not need to tell us again.
If you haven’t notified us, you need to do so by 15 January the year after you become an absentee owner. You should notify us using our Absentee Owner Notification Portal.
Once you have notified us that you are an absentee owner, your land tax assessments will include the absentee owner surcharge.
Please have your SRO customer number and either a land tax assessment or correspondence number handy. Your notification should take no more than 10 minutes to complete.
Failing to tell us you are an absentee owner is a notification default under the Taxation Administration Act 1997. When this happens, you will be liable for penalty tax on the surcharge amount assessed, in accordance with our revenue ruling on penalty tax and interest. This may be penalty tax of:
- 5 per cent if you voluntarily tell us that you are an absentee owner before we start investigating you,
- 20 per cent if you tell us you are an absentee owner after we start an investigation, and
- up to 90 per cent if we believe that you intentionally disregarded the law and hindered our investigation
Changes to your absentee owner status
From 1 October 2016, you can notify us of any change in your absentee owner status by updating your details through our Absentee Owner Notification Portal.
2016 land tax year
If you were an absentee owner at 31 December 2015, you should have told us by 15 January 2016 for the 2016 land tax year.
However, if you tell us by 15 January 2017 that you were an absentee owner for the 2016 land tax year, we will not apply any penalty tax on your 2016 land tax liability.
This concessionary treatment will not apply if we discover that you intentionally or deliberately chose not to notify us or concealed your absentee owner status. In such circumstances, penalty tax at much higher rates may apply in accordance with our revenue ruling on penalty tax and interest.
Application for exemption
An absentee person who holds a controlling interest in an absentee corporation may, in some circumstances, be eligible for an exemption. The effect of the exemption is that the absentee person, who holds a controlling interest in the absentee corporation, is taken to not hold that controlling interest. The result is the corporation that owns the land will not be considered an absentee corporation, and therefore will be exempt from the absentee owner surcharge.
The exemption is only available to an absentee person who holds a controlling interest in a corporation that is incorporated in Australia. It is intended to apply to those corporations which conduct a commercial operation in Australia and whose commercial activities make a strong and positive contribution to the Victorian economy and community by engaging local labour and using local materials and services through an Australian-based entity.
The Treasurer has published guidelines in the Government Gazette, outlining the basis on which exemption decisions are to be made. You should refer to these guidelines to determine whether you are eligible for the exemption. If you believe you are entitled to the exemption, you can apply for an exemption.