If you own property in Victoria, you may have to pay land tax.
From the 2020 land tax year, an absentee owner surcharge of 2% applies to Victorian land owned by an absentee owner. The surcharge was 1.5% from 1 January 2017 and 0.5% for the 2016 land tax year.
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 or penalties may apply.
What is an absentee owner?
An absentee owner is an absentee person that owns land in Victoria, and can be:
- an absentee individual
- an absentee corporation, or
- a trustee of an absentee trust.
Each of these terms has a specific meaning. You should refer to each term for more 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 applies in the following land tax year.
The surcharge is calculated on the total taxable value of Victorian land you own and will be included on your Victorian land tax assessment. The surcharge calculation depends on who owns the land and how they own it, for example if the land is jointly owned, owned by an absentee corporation that is part of a land tax group or owned by a trustee of an absentee trust that is a discretionary trust, unit trust or fixed trust.
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 of $300,000 or $25,000 (if the land is held on trust and is subject to the trust surcharge rate).
If your land attracts special land tax, you’ll pay this one-off tax at an absentee owner rate of 7% for the 2020 land tax year. From 16 December 2020, special land tax no longer applies.
Do I have to pay the absentee owner surcharge?
Tell us if you are an absentee owner
If you are an absentee owner at 31 December, you must tell us before 15 January of the following year 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. We assume that your absentee owner status is current until you tell us otherwise.
Failing to tell us that you are an absentee owner is a notification default under the Taxation Administration Act 1997. If this happens, you will be liable for penalty tax on the surcharge amount of land tax assessed in accordance with our revenue ruling on penalty tax and interest. This may be penalty tax of:
- 5% if you voluntarily tell us that you are an absentee owner before we start an investigation
- 20% if you tell us you are an absentee owner after we start an investigation
- up to 90% if we believe that you intentionally disregarded the law and hindered our investigation.
Changes to your absentee owner status
Notify us of any change in your absentee owner status by updating your details through our Absentee Owner Notification Portal.
Exemption from the absentee owner surcharge
An absentee corporation and an absentee trust may be eligible for an exemption from the absentee owner surcharge. If you believe you are eligible for an exemption, you can apply for one.
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 that the corporation owning the land will not be considered an absentee corporation, and therefore will not be subject to 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 and owns land in its own right. It does not apply to an absentee corporation that is incorporated outside Australia.
From the 2018 land tax year, an absentee beneficiary in relation to an absentee trust may, in some circumstances, be eligible for an exemption.
The effect of the exemption is that the relevant absentee beneficiary is taken to not be an absentee beneficiary. If the exemption has been granted to all of the absentee beneficiaries, then the trust is not considered to be an absentee trust and not subject to the absentee owner surcharge.
Treasurer's guidelines, published in the Government Gazette, outline the basis on which exemption decisions are made.
The exemption is intended to apply to those absentee corporations and absentee trusts that:
- are Australian based
- make a significant contribution to the economy and community by conducting a commercial operation in Victoria that engages local labour and uses local materials and services
- exhibit good corporate behaviour.
The exemption is not intended to apply where the absentee corporation or trustee of an absentee trust is merely a property investor or landlord.
Before you apply for an exemption, refer the relevant Treasurer's guidelines to determine your eligibility:
- For exemption applications relating to the 2016 and 2017 land tax years, refer to the Treasurer's guidelines issued on 11 August 2015.
- For exemption applications relating to the 2018 land tax year, refer to the Treasurer's guidelines issued on 5 January 2018 after a scheduled review. These guidelines include the criteria for absentee trusts.
- For exemption applications relating to the 2019 land tax year onwards, refer to the Treasurer's guidelines issued on 1 October 2018. These guidelines were issued to include examples of how build-to-rent developments may qualify for the exemption. The exemption will cease to apply when the build-to-rent development is completed, as the absentee corporation or the trustee of the absentee trust will then be considered a passive investor or landlord.