If paying your land tax will cause you to suffer serious hardship, you can apply for hardship relief. Your obligation to pay your land tax does not in itself constitute serious hardship.
Hardship relief can take the form of remission or postponement of land tax payment. You can only apply for relief on your outstanding land tax liability and relief will be limited to the assessments specified in your application.
Accessing hardship relief
As an individual, you may receive hardship relief where:
- You have suffered such a loss, or are in such circumstances, that paying land tax would cause serious hardship.
- Your dependants are in such circumstances that paying land tax will cause them serious hardship.
If you own land jointly with others, hardship relief is only available if all the owners are suffering hardship.
Companies may receive hardship relief where the holders of more than 60% of the issued ordinary share capital of a private company liable for land tax are in such circumstances that payment would cause serious hardship.
Hardship relief decisions
If your application for relief involves assessed land tax of $1000 or less in a tax year, the Commissioner decides your application. The Commissioner must seek approval from the Victorian Treasurer before waiving land tax.
If your application for relief involves land tax of more than $1000 in a tax year, the Land Tax Hardship Relief Board determines your application. The board can postpone payment of the land tax or waive all or part of the land tax and or penalties.
The board is independent of the State Revenue Office and comprises three members:
- The Secretary to the Department of Treasury and Finance or their nominee.
- The Commissioner or their nominee.
- A person selected by the Commissioner or their nominee from a panel of three people appointed by the Governor in Council on recommendation of the Minister.
Relief is discretionary
The Commissioner and the Board have a discretion to grant relief. This means that relief is not automatically granted.
There are various factors, in addition to you establishing serious hardship, which may influence the Commissioner or the Board’s decision. For example, if you have a long history of not paying land tax or if relieving you of your land tax liability would not relieve your serious hardship.
The Commissioner and the Board consider each application on its own merit.
The Land Tax Act 2005 does not define serious hardship so the Commissioner and the Board rely on the following general principles drawn from case law:
- Financial hardship – the term 'serious hardship' means serious financial hardship. Unfortunate circumstances, such as personal or emotional stress, are not relevant to the question of serious financial hardship.
- Inconvenience vs serious hardship – serious hardship is different to inconvenience or a mere hardship. Inconvenience may include having to reorganise finances, seek financial advice, or reduce expenditure on social activities and extravagances. Serious hardship, on the other hand, requires you to be in such a position that paying your land tax means you could not afford to provide the necessities of life for you and/or your dependants. Necessities include items such as food, clothing, medical supplies, accommodation and education for children. In considering your ability to pay for necessities, the Commissioner and the Board may examine your discretionary spending to see if there are areas where you could save money so that paying the tax would not actually impact your ability to provide necessities.
- Household circumstances – your financial circumstances as well as those of other household members can be taken into account. For example, whether your spouse is in a position to assist you or any other household members such as adult children, who may reasonably be expected to contribute to costs.
The Commissioner and the Board may also consider the following factors:
- Could you pay the land tax by rearranging your finances, selling or drawing on non-essential assets? This is because, generally, relief is not provided if you have access to savings, other monetary investments or other income.
- Has the serious hardship been caused by your own act or omission, for example, through a recent gift or loan to family or friends, or failure to apply for some other entitlement?
- Is the serious hardship of a short-term nature?
- Have you clearly demonstrated that the serious hardship is of a longer-term nature?
- What have you done to try to alleviate your hardship situation or pay your liability?
- Could you use equity in property or other assets as collateral for a loan to finance the payment of the land tax without causing any substantial erosion of that equity?
- Will you be selling any of your assets within the next 12 months?
- Are you able to make repayments on debts (such as mortgage or credit cards) greater than the minimum required on your financial statement/s?
- If you are a company, have you previously been granted relief and not traded out of difficulties?
When should I apply?
Your application should be lodged within one month of receiving (the date of service of) your land tax assessment, or any other time the Commissioner or Board determines.
Apply for hardship relief
You can apply for hardship relief by completing and lodging an application, which must include:
- Details of the serious hardship that you would suffer if you had to immediately pay the full amount of land tax
- Names of the people who would suffer hardship
- Any relevant factors that may lead to serious hardship committed by or on behalf of you, or in the case of a private company, any one or more of the shareholders of that company, which would lead to serious hardship if payment of the land tax was enforced.
If your application is late, you must also detail reasons for the delay.
You must be able to demonstrate hardship and should provide the following information and documents to support your application:
- Your bank statements (including, for example, any term deposits) and credit card statements, including all transaction details, for the last three months.
- Your mortgage statement/s, including all transaction details, for the last three months.
- Your complete income tax returns for the last three financial years (you can exclude your tax file number).
- Details of all your actual and expected income, including the income of other members of your household.
- An estimate of the amount of your current monthly outgoings, such as living expenses, medical costs etc.
- Evidence of hardship, for example final letter of demand, debt collection agency letter.
- A list of all your assets, including all properties you own in Australia by yourself or with others.
- A list of all properties that you owned in Australia by yourself or with others and have sold in the last twelve months.
After lodging your application
Once we receive your application, debt recovery action stops until the Commissioner or Board makes their decision.
Generally, we write to you within 21 days of receiving your application. At that time, we may ask you for more information in support of your application.
If your application is unsuccessful, interest may be charged on the amount owing from the due date.