Victorian SRO 2026-27 compliance focuses: Impacts for businesses and property owners

Key points

• The SRO looks to prioritise duty compliance, particularly foreign purchaser disclosures, indirect acquisitions involving commercial and industrial land, related-party dealings and residence-based concessions.
• For land tax and vacant residential land tax, SRO reviews will target grouping, trustees, absentee owners, undisclosed vacancies and exemption claims.
• SRO scrutiny will also include payroll tax obligations covering contractors, employee share schemes, fringe benefits, grouping and labour hire arrangements.

As businesses and property owners navigate increasingly complex tax regimes and compliance requirements, the Victorian State Revenue Office (SRO) has released its 2026-27 compliance focus areas. The scale of the SRO’s compliance activity is significant: for 2025-26, the SRO completed more than 13,500 investigations, with non-compliance detected in more than 90% of cases and $1.094 billion in tax assessed.

The announcement provides a useful insight into where SRO resources and audit activity have been and will continue to be directed and is also a reminder for businesses and property owners to consider their existing arrangements.

Duty compliance a priority

Transfer Duty

On the transfer duty front, the SRO has identified related-party transactions, foreign purchasers who fail to disclose their status, and transactions claiming residence-based concessions and exemptions as key areas of focus.

The risks in this area are reflected in the experience of the Legal Practitioners’ Liability Committee (LPLC), Victoria’s professional indemnity insurer for solicitors and barristers. In its annual reports, the LPLC has identified stamp duty advice as a recurring source of property and conveyancing claims, including in relation to duty exemptions and foreign purchaser duty. It has also noted that increased SRO audit activity has exposed instances of incorrect advice about the duty payable or how transactions could have been structured, reinforcing the importance of considering duty implications upfront.

Those involved in related-party transactions, acquisitions of residential property (particularly through structures involving a discretionary trust), or concessions or exemptions claims should carefully consider the duty implications and ensure the duty position is appropriately supported.

Landholder duty

The SRO has highlighted landholder duty, particularly acquisitions of Australian companies and unit trusts holding Victorian commercial and industrial land, as well as offshore transactions involving foreign entities that indirectly own Victorian energy, infrastructure or data centre assets.

This focus on commercial and industrial land sits alongside the Commercial and Industrial Property Tax (CIPT) reform, which commenced on 1 July 2024. A relevant acquisition of an interest in a landholder may trigger a duty liability and cause commercial or industrial property to enter the CIPT regime, commencing a 10-year transition to annual CIPT.

As more commercial and industrial properties enter the regime, those acquiring interests in companies or unit trusts that hold such property will need to consider both the immediate landholder duty implications of an acquisition and its longer-term consequences under CIPT.

Land tax compliance remains under scrutiny

The SRO has also identified several areas of focus for land tax, including land tax grouping, principal place of residence (PPR) exemptions, primary production exemptions, and land held by trustees or absentee owners.

The issues in land tax grouping reviews are often less about intentional non-compliance and more about changing circumstances, including where the Commissioner of State Revenue exercises a discretion to group related companies for land tax purposes. Structuring decisions for property acquisitions involving companies should therefore evaluate the potential for related companies to be grouped for land tax, amongst other relevant considerations.

Additionally, exemption claims should not be treated as a ‘set and forget’ exercise. There is often the misconception that once an exemption has been applied for and granted, nothing further is required. However, landowners must satisfy the eligibility requirements for the relevant exemption and should review their position at least annually, as land tax is assessed each year and changes in circumstances may mean an exemption no longer applies. This is relevant to the primary production and PPR exemptions, where eligibility depends on the particular facts and circumstances of the relevant period. The SRO’s continued focus on these exemptions suggests they remain common areas of error.

VRLT: A timely reminder for property owners

The inclusion of VRLT is unsurprising given the expansion of the existing regime across Victoria and the introduction of new rules for unimproved land. The SRO has confirmed it will focus on landowners who fail to disclose vacant properties when required, or who incorrectly claim exemptions such as the holiday home exemption.

With the next VRLT assessment date approaching, property owners should consider their VRLT position for relevant properties and whether they continue to satisfy the eligibility requirements for any exemptions they wish to leverage.

Payroll tax remains firmly on the radar

Payroll tax continues to be a major area of focus, specifically where employers fail to correctly disclose wages or meet their registration and lodgement obligations.

The SRO has specifically identified several key risk areas for 2026-27, including:

• contractor payments;
• employee share schemes;
• fringe benefits;
• payroll tax grouping arrangements; and
• labour hire service arrangements.

Given the complexity of Victoria’s grouping and contractor provisions, businesses may need to review their payroll tax circumstances before becoming subject to investigation activity by the SRO.

What does this mean in practice?

The SRO’s 2026-27 compliance priorities focus heavily on the accuracy of any self-assessment, disclosure of information and the integrity of exemption and concession claims. However, these published focus areas should not be regarded as limiting the SRO’s broader compliance activities, and we expect the SRO will continue to investigate other areas of potential non-compliance, including sub-sales. Existing arrangements should be reviewed, and any identified potential compliance issues should be addressed appropriately.

With the SRO signalling these areas as compliance priorities, now may be an appropriate time to address any issues before they become the subject of a review or investigation. Where errors are identified, early voluntary disclosure may result in reduced penalty taxes and interest costs, while also managing the relevant compliance profile with the SRO. Clients should contact their Pitcher Partners representative to discuss how these focus areas may impact their circumstances.