The Victorian State Taxation Further Amendment Bill 2025 introduces various proposed changes across several key property-related taxes, including Duty, Land Tax, Vacant Residential Land Tax, Congestion Levy, and the Commercial and Industrial Property Tax. These changes have potential implications for a wide range of stakeholders including owners and investors of various types of real property as well as the broader community. As Victoria’s tax terrain continues to shift, early engagement and impact assessment will remain important.
Overview of the bill
On 15 October 2025, the State Taxation Further Amendment Bill 2025 was released to the public. The Bill includes amendments to various state taxation legislation, including the following:
- Commercial and Industrial Property Tax Reform Act 2024
- Congestion Levy Act 2005
- Duties Act 2000
- First Home Owner Grant and Home Buyer Schemes Act 2000
- Land Tax Act 2005
- Taxation Administration Act 1997
The Bill contains a mix of proposed new measures and previously announced changes. While some changes are positive and welcomed, other changes may adversely impact various parties, many with no meaningful notice as certain provisions take effect immediately after Royal Assent or from 1 January 2026.
Summary of key changes
The Bill is an omnibus package, densely packed with amendments to several existing Acts.
Below is a summary of the key proposed state taxation changes, based on the Bill as released (pending passage through the Victorian Parliament and final legislative detail):
| Type | Nature of change | Start Date | Relevant Parties and Potential Impact |
| Commercial and Industrial Property Tax | Amendments intended to clarify that a requirement for land to enter the tax reform scheme is that the dutiable value on which duty is chargeable (after applying any partial exemption or concession except the regional duty concession) must be at least 50% of the unencumbered value of the property.
Implications include:
|
Retrospective from 1 July 2024 | Parties involved in commercial, industrial, or eligible student accommodation property transactions are expected to face additional complexity in determining whether land would enter the tax reform scheme |
| Congestion Levy | We last wrote about the changes as part of our 2024-25 Victorian Budget Update.
These changes are:
Other changes (not previously known to the public) include:
|
1 January 2026 | Owners, operators, lessees/licensees and end users of car parks who are subject to the levy are expected to face increased costs
Those in the expanded Category 2 area may soon incur the levy for the first time |
| Foreign Purchaser Additional Duty | New compliance requirement for New Zealand citizens (without Australian citizenship or permanent residency) to not be classified as a ‘foreign natural person’ which involve the following:
Previously, such persons would not be considered a foreign natural person if they were physically present in Australia at settlement of the relevant transaction
|
One day after Royal Assent | New Zealand citizens (without Australian citizenship or permanent residency) acquiring direct or indirect interests in residential property may be liable for a duty surcharge of 8% (subject to any future rate changes) |
| Custodian transfers – Duty | New dedicated exemption for certain transfers of dutiable property involving custodians or sub-custodians in relation to trusts | One day after Royal Assent | Trustees and custodians involved in trust property transfers may benefit from this new exemption provision
|
| Land Tax | Amendment to the definition of ‘natural person absentee’ and ‘Australian citizen or resident’ for New Zealand citizens without an Australian citizenship or permanent residency to focus on ordinary residence in Australia to determine surcharge liability. | 1 January 2026 | New Zealand citizens (without Australian citizenship or permanent residency) who have and/or are looking to acquire a direct or indirect interest in any type of property and do not ordinarily reside in Australia may be liable for an additional annual land tax surcharge of 4% (subject to future rate changes) |
| New Principal Place of Residence exemption provisions for land with a temporary residence (such as a caravan, motorhome, trailer, tent, shed, barn) used and occupied as the owner’s principal place of residence, subject to conditions | 1 January 2026 | Owners of land with a temporary residence who use and occupy the temporary residence as their home may benefit from these new exemption provisions | |
| Vacant Residential Land Tax | Amendment to expand the definition of alpine resorts that are outside the scope of the Vacant Residential Land (“VRLT”) to include land located within the boundary of the locality of Dinner Plain in a planning scheme that is in force in the Alpine Shire Council | Retrospective from the 2025 VRLT year | Owners of land in Dinner Plain may benefit from this amendment and may be entitled to a refund of VRLT paid for the 2025 year if their land meets the expanded definition |
| Change to the VRLT annual statutory notification deadline from 15 January to 15 February | One day after Royal Assent | Owners required to make a VRLT notification may benefit from the additional time provided to meet their statutory obligations | |
| New exemption provision for residential land temporarily incapable of being used as such, provided it resumes to be residential land by the end of the year | 1 January 2026 | Owners of land affected by VRLT may benefit from the new exemption provision |
Our preliminary views
Commercial and Industrial Property Tax Amendments
The proposed amendments to the Commercial and Industrial Property Tax regime are largely layered on top of existing concepts in the Duties Act 2000, rather than involving a rewrite. While this approach is understandable, it does mean that the regime remains somewhat cumbersome and challenging to navigate.
The importance of land valuation is heightened in yet another context. It now factors into the equation for determining whether land would enter the tax reform scheme. This determination is made by reference to whether the dutiable value (after applying any partial exemption or concession other than the regional duty concession) amounts to 50% or more of the unencumbered value of the property. Eligibility for exemptions or concessions remains important to determine the actual duty implications of a transaction. However, the extent to which a partial exemption or concession applies is also critical. This is particularly true in scenarios involving partitions or in specie distributions, where valuation and interpretive disagreements are not uncommon. Stakeholders may not know whether land should be in the new tax reform scheme until well after a transaction and may face the risk of retrospective adjustments or disputes.
The regime is still a very new and deeply complex system, not just for lawmakers, but also for all parties impacted or potentially impacted by the rules. It is likely that further fixes and clarifications will be needed as practical issues emerge.
Foreign Duty and Land Tax Surcharges
Many New Zealand citizens would be subject to strict residency requirements to remain outside the scope of the Foreign Purchaser Additional Duty and Absentee Owner Surcharge. The High Court decision of G Global 120E T2 Pty Ltd v Commissioner of State Revenue; G Global 180Q Pty Ltd v Commissioner of State Revenue; G Global 180Q Pty Ltd v Commissioner of State Revenue; Stott v The Commonwealth of Australia [2025] HCA 39 recently upheld, among other things, the retrospective validity of the Absentee Owner Surcharge from 2018. It is a reminder that the landscape for foreign purchasers is complex. It is important for New Zealand clients to consider both historical and future duty and land tax implications in light of the Bill and the High Court decision.
Congestion Levy
The changes to the congestion levy are likely to have a broad impact, particularly with the expansion of the Category 2 levy area and the increase in rates. More car park owners and operators (especially in the inner-eastern suburbs) will be caught by the new rules. The increased or new compliance costs and congestion levy mean that, in practice, end users are likely to end up bearing at least some of the additional costs. While there are exemptions and concessions from the levy, including new ones proposed by the Bill, time will tell whether these go far enough.
Land Tax & Vacant Residential Land Tax
Most of the changes to land tax and the VRLT are welcome, particularly the new exemptions for temporary residences and certain VRLT scenarios. However, as is often the case, the devil is in the detail. The rules remain complicated and will require careful analysis to work through in practice. While the intent is positive, the practical application may be challenging, and there are still plenty of grey areas that will need to be worked through over time.
Overall
This Bill underscores the continuing complexity and intricacy of Victoria’s state tax landscape. The evolving web of rules is a challenge not only for lawmakers but also for anyone who owns, invests in, or advises on property in Victoria. Stakeholders should remain vigilant, engage early, and be prepared for further changes and clarifications as the landscape continues to evolve.
Next steps
It is critical for clients to review their position and consider how these rules may apply. This bulletin contains a summary of the key proposed changes and therefore does not exhaustively cover all changes introduced by the Bill, the specific provisions and various nuances, including definitions, exceptions and mechanisms for relief.
Clients should contact their Pitcher Partners representative to seek advice to assess and determine what action is required in relation to any opportunities or risks.
