Absentee unit trusts

Example 1

Adam Pty Ltd is trustee of the Adam Unit Trust, which owns taxable land in Victoria. Adam Pty Ltd has not notified us of the unitholders of the trust. That means it will be liable to the trust surcharge rate of land tax.

The unitholders of the Adam Unit Trust are Aisha and Kofi, who each hold 50% of the units. Aisha is an absentee person and therefore the Adam Unit Trust is an absentee trust and also subject to the absentee surcharge rate of land tax on Aisha's unitholdings. Aisha and Kofi do not own other land.

Land tax liability for trustee

In 2025, the taxable value of the land held under the Adam Unit Trust is $2,800,000 and the absentee owner surcharge is 4%.

To calculate the land tax payable by Adam Pty Ltd:

1. Land tax is assessed on the trust land at the trust surcharge rate. The trust surcharge rate for land with a taxable value of $2,800,000 is $29,435.
2. The proportion of units held by the absentee beneficiary (Aisha) is multiplied by the absentee owner surcharge of 4%. As 50% of the units are held by Aisha, the absentee owner surcharge is $2,800,000 × 4% × 50% = $56,000.

The total land tax assessed for Adam Pty Ltd on the trust land is $29,435 + $56,000 = $85,435.

Example 2

Using the same details as Example 1 above, except that Adam Pty Ltd had notified us of the unitholders of the trust, is an ultimate trust (i.e. not in a chain of trusts) and both Aisha and Kofi are absentee owners.

That means Aisha and Kofi are each deemed to be the owner of the trust land (in addition to the trustee) for land tax purposes in proportion to their unit holdings in the trust. That is, Aisha and Kofi are each deemed to be the owner of 50% of the trust land.

Land tax liability for trustee

Land tax is assessed on the trust land at the general absentee owner surcharge rate of land tax.  

For land with a taxable value of $2,800,000, the rate is $83,850 plus 5.65% of the land’s taxable value that exceeds $1,800,000. 

The total land tax assessed for Adam Pty Ltd on the trust land is $83,850 + (($2,800,000 - $1,800,000) x 5.65%)  = $140,350. 

Unitholder’s land tax liability

As Aisha and Kofi are both absentee owners in this example, the land tax assessed on each of their 50% unitholdings (i.e. $1,400,000 taxable value each) as deemed owners are calculated in the same way: 

1. Land tax is assessed on the trust land deemed to be owned by the absentee unitholders at the general absentee owner rate of land tax. The general absentee owner rate for land with a taxable value from $1,000,000 up to $1,800,000 is $44,650 plus 4.9% of the amount over $1,000,000.

The tax assessed is $44,650 + (($1,400,000 – $1,000,000) × 4.9%) = $64,250.

1. A deduction is applied to avoid double taxation. This is the lesser of:
   1. Each unitholder’s share of the trust land multiplied by the tax assessed on the trustee (excluding the absentee surcharge) (i.e. 50% × $28,350 = $14,175) plus the taxable value of the trust land deemed to be owned by the unitholder × 4% (i.e. $1,400,000 × 4% = $56,000), (i.e. $14,175 + $56,000 = $70,175), or
   2. The taxable value of the trust land deemed to be owned by each unitholder divided by the taxable value of all land owned by Aisha multiplied by the tax assessed for each unitholder (i.e. $1,400,000 ÷ $1,400,000 × $64,250 = $64,250). 

The lesser of the 2 is $64,250. Neither Aisha or Kofi has tax to pay after applying the deduction (i.e. tax assessed $64,250 minus deduction $64,250 = $0).

Example 3

Using the same details as Example 1 above (i.e. only Aisha is an absentee owner), except that Adam Pty Ltd has notified us of the unitholders of the trust and the trust is not an ultimate trust. 

The notification means that Adam Pty Ltd is liable for general rate of land tax for the trust’s land. The unitholders, Aisha and Kofi, are each deemed owners (in addition to the trustee) according to their respective unitholdings (50% each). 

As the absentee unitholder, Aisha will be assessed at the general absentee owner surcharge rate for her interests in the trust’s land together with any other taxable land she owns. Kofi is not an absentee owner and will be assessed at general rate of land tax for his interests in the trust’s land together with any other taxable land he owns. 

Land tax liability for trustee

Adam Pty Ltd’s liability in the 2025 tax year is based on the general rate of land tax plus the absentee owners’ interests in the trust land at the absentee owner surcharge rate calculated as follows. 

For land with a taxable value of $2,800,000, the general rate is $11,850 plus 1.65% of the land’s taxable value that exceeds $1,800,000. Land tax at general rate is $11,850 + (($2,800,000 - $1,800,000) x 1.65%) = $28,350. 

Plus, the absentee proportion ($1,400,000) at the absentee surcharge rate of 4% which equals $56,000. 

The total land tax assessed for Adam Pty Ltd on the trust land is $28,350 + $56,000 = $84,350. 

Land tax liability for Aisha

Land tax assessed on Aisha, as the only absentee unitholder, is based on the general absentee owner surcharge rate calculated as follows. 

Based on Aisha’s interest in the trust land of $1,400,000, the rate is $44,650 plus 4.9% of the taxable value over $1,000,000. Her tax assessed before a deduction is $44,650 + $19,600 = $64,250. 

A deduction is applied for the tax paid by the trustee to avoid double taxation. This is the lesser of:

• Aisha’s interest in the trust land multiplied by part of the total amount of tax excluding the absentee owner surcharge (i.e. 50% × $11,850 = $5,925), plus the taxable value of Aisha’s interest in the trust land assessed at the absentee owner surcharge rate (i.e. $1,400,000 × 4% = $56,000), which equals $61,925, and 
• The taxable value of Aisha’s interest in the trust land divided by the total taxable value of all land owned by Aisha multiplied by the tax assessed on Aisha at the general absentee owner surcharge rate (i.e. $1,4000,000 ÷ $1,400,000 × $8,250 = $64,250). 

The lesser of the 2 calculations is $61,925. The tax payable by Aisha after applying the deduction is $2,325 ($64,250 – $61,925). 

Land tax liability for Kofi

As a non-absentee unitholder, Kofi is assessed for his total landholdings based on the general rate of land tax. 

The general rate for land with a taxable value of between $1,000,000 and $1,800,000 is $4,650 plus 0.9% of the amount over $1,000,000. Kofi’s tax assessed is $4,650 + $3,600 = $8,250.  

A deduction is applied for the tax paid by the trustee to avoid double taxation. This is the lesser of:

• Kofi’s share of the trust land multiplied by the tax assessed on the trustee excluding the absentee owner surcharge (i.e. 50% × $28,350 = $14,175), and
• The taxable value of the trust land deemed to be owned by Kofi divided by the taxable value of all land owned by Kofi multiplied by the tax assessed for Kofi at general rates (i.e. $1,4000,000 ÷ $1,400,000 × $8,250 = $8,250).

The lesser of the 2 calculations is $8,250. No tax is payable by Kofi after applying the deduction (i.e. $8,250 – $8,250 = $0).

Example 4

Beta Pty Ltd is trustee of the Beta Unit Trust, which has issued 100 units. The unitholders are Chloe (who holds 25 units), Harper (15 units) and Mei (60 units). Harper and Mei are absentee individuals.

Beta Pty Ltd must notify us the Beta Unit Trust is an absentee trust and the percentage of the units held by absentee persons is 75%. Each unitholder of a unit trust who is an absentee person and has received their own land tax assessment must also make a separate notification.