Changes to state taxes November 2025

Published on 25 November 2025

The State Taxation Further Amendment Act 2025 (the Act) received Royal Assent on 25 November 2025.

The Act implements changes to the congestion levy announced in the 2024–25 Budget Update and makes various changes to other taxation laws.

Congestion levy changes

The Act makes several changes to the Congestion Levy Act 2005, which commence from 1 January 2026 to apply to the 2026 levy year onwards.

The Act increases the category 1 area levy rate to $3,030 per leviable parking space and the category 2 area rate to $2,150 per space. Levy rates in 2027 and subsequent years will continue to be adjusted annually by Consumer Price Index.

The Act expands the category 2 levy area to include inner-eastern suburban areas not currently captured by the levy. These include the suburbs of Burnley, Cremorne, South Yarra, Windsor and parts of Richmond, Abbotsford and Prahran in proximity to Chapel Street, Bridge Road, Swan Street, Victoria Street, Hoddle Street and Punt Road. The increased category 2 rate of $2,150 per leviable parking space will apply to the expansion area. The Act also moves the area surrounding the Queen Victoria Market from the category 1 area to the category 2 area.

The Act provides new congestion levy exemptions and concessions.

A 50% levy reduction will be available for conditional free parking provided by shopping centres and other retailers in the category 2 area exclusively for retail customers. To be eligible, the parking space must be exclusively set aside for retail customer parking and connected to a retail premises or retail shopping centre such that the parking space is located on, or adjacent to, the retail premises or retail shopping centre. The parking must be either provided free of charge for at least 60 minutes to all customers or provided free of charge to customers who make a purchase at the retail premises or shopping centre.

An exemption will be available to government schools and government boarding schools providing free parking on their premises, to align their treatment with non-government schools.

The Act improves congestion levy administration by excluding exclusively residential parking spaces from the levy framework, removing the requirement for home-owners to register for the congestion levy if they exclusively own residential parking spaces (which are exempt from the levy).

The Act introduces a requirement for the relevant Minister to enter a memorandum of understanding with each municipal council with any land in the levy area in relation to annual allocations for the purpose of funding active transport or other transport initiatives.

Vacant residential land tax changes

The Act amends the Land Tax Act 2005 to exclude residential land in Dinner Plain village from vacant residential land tax (VRLT). This change applies retrospectively from 1 January 2025 when VRLT was expanded to apply to the whole of Victoria. Owners of residential land in Dinner Plain who paid VRLT for the 2025 land tax year will be entitled to refunds.

The Land Tax Act 2005 is also amended to change the VRLT notification deadline from 15 January to 15 February each calendar year. Owners must notify the SRO in writing if residential land they own was vacant in the previous year, and apply for certain VRLT exemptions, before the notification deadline. This amendment commences from the day after Royal Assent and will apply from the 2026 land tax year onwards.

The Act introduces a VRLT exemption for land with a residence under construction or renovation, or an uninhabitable residence, at any time during the year before the relevant tax year. This ensures that VRLT is not imposed on a residence that was unavailable for occupation for a significant part of the year. This exemption will operate in addition to an existing exemption for construction or renovation being undertaken for a longer period on land. The amendment will take effect from the day after Royal Assent for the 2026 land tax year.

Land tax changes 

The Act also introduces a land tax exemption for land valued less than $300,000 containing a non-permanent shelter used as the owner’s residence, for situations when the principal place of residence (PPR) exemption from land tax does not apply. The new exemption has similar requirements to the PPR exemption.

In addition, the land’s site value must be less than $300,000, the owner must own no other land, and the land must have a non-permanent residence being used by the owner or a vested beneficiary of a fixed trust. Partially built homes or non-residential properties will not be able to receive an exemption.

Residential use requirements will align with the existing PPR exemption requiring the land to be used as a PPR since 1 July in the previous year, with some narrow exceptions. The amendment will take effect from the day after Royal Assent for the 2026 land tax year.

Application of certain tax measures to New Zealand citizens

The Act amends the Duties Act 2000 and Land Tax Act 2005 to clarify how foreign purchaser additional duty (FPAD) and the absentee owner surcharge (AOS) apply to citizens of New Zealand. The amendments replace certain requirements for citizens of New Zealand to hold a special category visa with tests based on ordinary residence in Australia.

To be excluded from FPAD, a New Zealand citizen must ordinarily reside in Australia for a continuous period of at least 6 months in a period commencing 12 months before the date of the dutiable transaction or relevant acquisition and ending 12 months after that date. This amendment will commence from the day after Royal Assent.

For AOS, it will no longer be relevant if a New Zealand citizen holds a special category visa. A New Zealand citizen may still be excluded from AOS if they ordinarily reside in Australia or if they meet the presence in Australia test (in Australia on 31 December in the year immediately preceding the tax year and for a total period of at least 6 months in the year immediately preceding the tax year). This takes effect from the 2026 land tax year onwards.

The Act also amends the First Home Owner Grant and Home Buyer Schemes Act 2000 to remove the requirement for citizens of New Zealand to hold a special category visa to be eligible for the First Home Owner Grant (FHOG). This amendment will commence from the day after Royal Assent.

Other duties changes

The Act amends the Commercial and Industrial Property Tax Reform Act 2024 and Duties Act 2000 to ensure that for direct transfers of land to enter the commercial and industrial property tax (CIPT) reform, duty must be payable on 50% or more of the dutiable value of the property, consistent with the original policy intent. The amendment will apply retrospectively to transactions from 1 July 2024 when the CIPT reform commenced.

The Act amends the Duties Act 2000 to introduce an exemption for transfers involving a custodian of a trustee of a trust, such as the appointment or change of a custodian, a transfer back to the trustee or appointment of a sub-custodian. The amendment will commence from the day after Royal Assent.

Amendments to tax processes

The Act amends the First Home Owner Grant and Home Buyer Schemes Act 2000 (FHOGHBS Act) to deem a document sent electronically by the Commissioner of State Revenue (Commissioner) to be served when the communication is received. The amendment aligns the electronic service rules for the FHOGHBS Act with the Taxation Administration Act 1997 (TAA) to ensure consistency. The amendment will take effect from the day after Royal Assent.

The Act amends the Land Tax Act 2005 to raise the threshold for the Land Tax Hardship Relief Board to consider applications from $1,000 to $5,000 and remove the requirement for the Treasurer to approve the Commissioner’s grants of relief. This amendment will commence from the day after Royal Assent.

The Act amends the TAA to authorise tax officers to share tax-related information with the Valuer-General Victoria. This amendment will facilitate the administration of Victorian tax and revenue laws and protect public revenue. Any information sharing with the Valuer-General Victoria will be conducted under the strict protections and safeguards provided by the TAA’s secrecy provisions. This amendment will commence from the day after Royal Assent.

The Act repeals the Taxation (Interest on Overpayments) Act 1986, which contained provisions relating to the payment of interest on refunds to taxpayers following successful objection or appeal. This Act no longer has application because objections, appeals and refunds are now governed by the TAA and all historical matters have been finalised. The amendment will take effect from the day after Royal Assent.

Other amendments

The Act amends the Building Act 1993 to ensure that the method of calculating the building permit levy is clear and fit for purpose. The amendments establish a clear calculation method going forward, validate the calculation and imposition of the levy in the past and make other consequential amendments to ensure smooth operation of the building permit levy scheme.

The Act also amends the Domestic Animals Act 1994 to give effect to a modest increase in the amounts payable to the Victorian Government from dog and cat registration fees collected by councils, and greyhound registration fees collected by Greyhound Racing Victoria (GRV). The Act will increase the amount payable from $4.51 (2024–25) to $9 (2026–27) for each dog and cat registration, increasing annually in line with regular increases to fees under the Monetary Units Act 2004, and from $3.50 (2024–25) to $7 (2026–27) for each GRV greyhound registration. The increase will support Agriculture Victoria to continue to undertake important activities such as responsible pet ownership programs, animal welfare initiatives and research.

The Act amends the Limitation of Actions Act 1958 to clarify the limitation period applicable to proceedings for the recovery of invalid taxes. This amendment clarifies that section 27 of the Limitation of Actions Act does not apply to proceedings to which section 20A(2) of the Act applies. This amendment commences on the day of Royal Assent.