If you own property in Victoria, you may have to pay land tax.
An absentee owner surcharge of 1.5 per cent applies from 1 January 2017 to Victorian land owned by an absentee owner.
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.
An absentee person is one of the following:
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 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 on 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 6.5 per cent from 1 January 2017 (previously 5.5 per cent).
Use our eligibility tool to help determine if you have to pay the 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. 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 an investigation,
- 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
Notify us of any change in your absentee owner status by updating your details through our Absentee Owner Notification Portal.
An absentee corporation and an absentee trust may be eligible for an exemption from the absentee owner surcharge.
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 and owns land in its own right.
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 absentee beneficiary is taken to be a beneficiary who is not an absentee beneficiary. If the exemption has been granted to all of the absentee beneficiaries, then the trust is not an absentee trust.
If you believe you are entitled to an exemption, you can refer to the Treasurer's guidelines, published in the Government Gazette, which outline the basis on which exemption decisions are made. If you believe you are eligible for an exemption, you can apply for one.
The exemption is intended to apply to those absentee corporations and absentee trusts that:
- Are Australian based,
- Conduct a commercial operation in Victoria and whose commercial activities make a significant contribution to the Victorian economy and community by engaging local labour and using local materials and services, and
- Exhibit good corporate behavior
There are two sets of guidelines. The guidelines issued on 11 August 2015 apply to the 2016 and 2017 land tax years.
Following a scheduled review, updated guidelines were issued on 5 January 2018 and include the criteria for absentee trusts. These guidelines will apply to the 2018 land tax year onwards.
This exemption is not intended to apply where the absentee corporation or absentee trust is merely a property investor or landlord.