The next deadline for statutory notifications for the Vacant Residential Land Tax and the Absentee Owner Surcharge is 15 January 2023.
What are the notification requirements?
Where residential land in Victoria was vacant for more than six months in a calendar year, the landowner(s) must notify the Victorian State Revenue Office (“SRO”) by 15 January of the year following the calendar year in which the property was vacant.
If a landowner is an absentee owner of Victorian taxable land (including non-residential land) on 31 December, the landowner must similarly notify the SRO before 15 January of the following year.
For example, the SRO must be notified by 15 January 2023 in respect of land:
- that was vacant for more than six months during the 2022 calendar year; and
- that was owned by an absentee owner as at 31 December 2022.
What if a notification has already been made?
If a landowner has already notified the SRO appropriately, no further action should be required, unless the circumstances of the landowner and/or the land have changed.
What if a notification is required but is not made by the relevant deadline?
The notification obligation is a statutory obligation within the Victorian Land Tax Act 2005.
If the relevant notification is not made by the deadline and the SRO subsequently determines that land is subject to the Vacant Residential Land Tax (“VRLT“) or Absentee Owner Surcharge (“AOS“), the SRO will assess the landowner for the relevant outstanding tax or surcharge and is likely to impose penalty tax for any shortfall (generally referred to as a shortfall default) and failure to notify the SRO by the relevant 15 January deadline (generally referred to as a notification default).
What is the vacant residential land tax?
Broadly, the VRLT is a tax on residential land in Melbourne’s inner and middle suburbs that are “vacant” for more than six months in a calendar year.
The VRLT is an annual tax charged at the rate of 1% of the Capital Improved Value of the land.
A property is considered vacant, if for more than six months in the preceding calendar year, it has not been lived in by:
- the owner or the owner’s permitted occupier as a principal place of residence; or
- a person under a lease or short-term letting arrangement made in good faith and not for the purpose of avoiding the payment of the VRLT.
What is the absentee owner surcharge?
Broadly, the AOS is a surcharge of 2% of the Unimproved Value (also known as Site Value) of taxable land held by an absentee owner.
If a landowner is an absentee owner of land as at 31 December, the surcharge applies in the following year’s land tax assessment.
An absentee owner is an absentee person that owns land in Victoria, and this can be:
- an absentee individual — an individual who is not an Australian citizen or permanent resident and (a) who does not ordinarily reside in Australia; and (b) who was either absent from Australia for more than six months in total in the year prior to the tax year or who was absent from Australia on 31 December of the year prior to the tax year;
- an absentee corporation — means a corporation incorporated outside of Australia or in which absentee persons have a controlling interest; or
- a trustee of an absentee trust — means a trust with at least one beneficiary or unitholder who is an absentee individual, an absentee corporation or a trustee of an absentee trust.
What are the next steps?
Clients should contact their Pitcher Partners representative well before 15 January for any assistance required in determining whether the VRLT and/or the AOS apply to their land and making the notification to the SRO by the 15 January deadline where relevant.