Under the Land Tax Act 2005, you may apply for relief from land tax if your financial circumstances are such that paying your outstanding land tax would cause serious hardship.
Your obligation to pay your land tax does not in itself constitute serious hardship.
What other options are there?
Before you apply for relief due to serious hardship, you should consider your payment options with the State Revenue Office.
If you require some assistance to pay your land tax, you can set up a payment plan to pay your assessment by instalments via Autopay.
With Autopay, you can pay your land tax in instalments (before the assessment due date) which can be spread over up to 38 weeks from the issue date of the assessment.
If the due date has passed you can apply for a payment plan or contact our Debt Management Branch on 13 21 61 – option 2.
Access to relief due to serious hardship
As an individual, you may apply for 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, relief is only available if all the owners are suffering hardship.
Companies may also apply for 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.
You can only apply for relief on your outstanding land tax liability.
In the event you have partially paid your liability only the outstanding amount can be considered.
A refund of any liability that has been paid cannot be provided through the hardship relief process.
How is an application considered?
If your application for relief involves an assessed land tax amount of $1,000 or less in a tax year, the Commissioner of State Revenue (or their nominee) determines your application. The Commissioner must seek approval from the Victorian Treasurer before waiving land tax.
If your application for relief involves an assessed land tax amount of more than $1,000 in a tax year, the Land Tax Hardship Relief Board determines your application.
The Board is independent of the State Revenue Office and comprises 3 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 3 people appointed by the Governor in Council on a recommendation of the Minister.
Determining factors
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:
1. Financial hardship
The term 'serious hardship' means serious financial hardship relating to an inability to provide the basic necessities of life. Necessities include items such as food, clothing, medical supplies, accommodation and education for children.
Personal circumstances, or whether you think you should not be charged land tax, may not be relevant to the question of serious financial hardship.
In deciding whether you suffer financial hardship, the Commissioner or the Board will assess how your current situation stops you from paying your outstanding land tax now and in the near future.
2. Inconvenience vs serious hardship
Serious hardship is different to inconvenience or mere hardship. An inconvenience may include having to reorganise finances, seeking financial advice or reducing 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 basic necessities of life for you and/or your dependants as defined above.
In considering your ability to pay for basic 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.
3. Household circumstances
Your financial circumstances as well as those of other household members can be considered. For example, whether your spouse or partner can assist you or any other household members such as adult children or other adults living with you, who may reasonably be expected to contribute to costs.
In addition, the Commissioner or 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 options, 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, failure to apply for some other entitlement or excessive spending on non-essential items.
- 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 ease 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 reduction 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? Have you entered a payment arrangement?
Relief is discretionary
While the Commissioner and the Board have discretion to grant relief, it does not mean relief will be granted.
In addition to assessing whether you are in serious hardship, there are various factors which may influence the Commissioner or the Board's decision. For example, if you have a long history of not paying your land tax, if granting relief would not relieve your serious hardship situation or if you have already entered into a payment arrangement and are making repayments.
Applying for hardship relief
You can apply for hardship relief by completing and lodging an application.
Before you apply, ensure you have considered whether:
- you are in serious hardship
- other payment options are available to you
- your current financial situation is of a short-term nature
- you made reasonable attempts to try and alleviate your current situation
- you took reasonable steps to rearrange your finances such as selling or drawing on non-essential assets.
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.
When applying for hardship relief, you must include:
- detailed reasons for the delay in applying, if you apply outside the one-month period.
- 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 are suffering or will suffer hardship if having to pay their land tax.
- 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.
Required evidence
To support your claim of serious hardship, you must provide evidence that supports your current financial circumstances, such as:
- final letters of demand, debt collection agency letter and changes in financial income status
- bank and credit card statements for all accounts you hold individually, with others and/or business accounts including all transaction details for the last 3 months
- mortgage statement/s including all transaction details for the last 3 months
- notice of assessment issued by the Australian Taxation Office for the most recent financial year
- details of all your actual and expected income, including the income of other members of your household
- an estimate of your current monthly outgoings such as living expenses, medical costs and so on
- a list of all your assets, including properties you own in Australia by yourself or with others, and properties sold in the last 12 months
- a list of all properties that you owned in Australia by yourself or with others and have sold in the last 12 months.
Failure to provide the relevant information may result in your application not proceeding. However, providing one or more of these documents listed may not necessarily result in you being granted relief.
Review and decision
Once we receive your application, an officer will contact you to:
- discuss your matter and explore alternative options with you
- explain the process and steps involved
- request further information and documentation if required.
Once your application has been considered by either the Commissioner or the Board, you will be advised of the decision in writing. If your application is unsuccessful, interest may be charged on the amount owing from the due date.
There is no direct appeal process, and you cannot reapply for relief for the same land tax year.
