If you own property in Victoria, you may have to pay land tax.
From 1 January 2016, a 0.5 per cent absentee owner surcharge applies to Victorian land owned by an absentee owner. The absentee owner surcharge is an additional amount payable over the general and trust surcharge rates of land tax. From 1 January 2017, the absentee owner surcharge will increase from 0.5 per cent to 1.5 per cent.
When will the surcharge apply?
The absentee owner surcharge will be included in your land tax assessment for any Victorian land you own if you are an absentee owner. The surcharge is calculated based on the site value of the land.
Please note, the surcharge does not apply if your property is exempt from land tax or its site value is below the threshold.
If your property attracts special land tax, however, you’ll pay an absentee owner flat rate of 5.5 per cent of the taxable value of the land in 2016, and 6.5 per cent from 1 January 2017.
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.
Tell us if you’re an absentee owner
If you believe you are an absentee owner as at 31 December, you should notify us as soon as possible using our Absentee Owner Notification Portal.
If you recently received a letter from us stating that our records show you are an absentee owner, and you wish to notify us that you are not, please use the portal to do this. You may also use the portal to notify us of a change in your status if you subsequently become an absentee owner.
Please remember to 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.
Joint owners have two options. They can nominate one joint owner to notify us on behalf of all the joint owners using the joint ownership customer number, or each joint owner can notify us separately using their individual SRO customer number.
If you are an absentee owner as at 31 December 2015 and you do not notify us, you may have to pay penalties.
Land with joint owners
If you own land with others, you are a joint owner. Joint owners are assessed in three stages:
- The joint ownership is assessed,
- Each individual member of the joint ownership may be separately assessed, and
- A deduction is then applied to each individual member’s separate assessment to avoid double taxation
How the absentee owner surcharge applies to joint owners depends on how many of the joint owners are absentee owners.
If all the joint owners are absentee owners, the surcharge applies to the joint ownership and to each individual owner.
If only some of the joint owners are absentee owners, the surcharge will not apply to the joint ownership assessment. The surcharge will only apply to the individual absentee owner. A non-absentee joint owner will not be subject to the surcharge.
Changes to your absentee owner status
You only need to notify us once, unless your absentee owner status changes. If you have notified us that you are an absentee owner and there is no change in your status, your land tax assessments will include the absentee owner surcharge, until you update your status.
If your status changes, you can notify us by updating your details through our Absentee Owner Notification Portal, using your customer information.
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.