Victorian land tax: Landowners facing new year pain with 2019 land tax assessments

The Victorian State Revenue Office (SRO) is issuing land tax assessments for the 2019 calendar year. The assessments are generally listing properties valued at significantly higher than the 2018 levels.

With the management of non-recoverable costs and/or maintenance of tenant relationships integral to landowners’ continuing economic success in a softening property market, land tax cost management is now more crucial than ever. .

The latest round of valuations in Victoria are predominantly undertaken by the Valuer-General (following the centralisation of the valuation regime away from local Councils in 2018).

Despite the Victorian property market softening during the 2018 calendar year, the relevant valuations used for this year’s land tax assessments are based on values as at 1 January 2018 (prior to the downturn).

We have noticed that valuations issued by the valuation authority have not softened as would be expected. In contrast, we have noticed a significant increase in property values from 2016 to 2018, with the average value of assessments across Victoria understood to have increased by at least 20%.

Landowners must carefully review their 2019 Land Tax Assessment notices and determine whether they wish to object to the valuations within the statutory 60 day period. In doing so, they should obtain advice around the common errors we frequently come across:.

  • land incorrectly appearing on, or missing from, a taxpayer’s assessment;
  • an incorrect rate of tax being applied – for example, the SRO incorrectly applying surcharge rates applicable for trusts and ‘foreign’ owners;
  • taxable values in the assessment not aligning to corresponding valuation notices;
  • land in the assessment being subject to Victoria’s vacancy tax regime (but not assessed on that basis); and
  • exemptions not being correctly or overlooked.

Macpherson Kelley’s Tax Team has in depth state taxes expertise and assists land owning clients by undertaking an annual legal review of their land tax assessments to identify errors and savings in land tax. We also work with a number of valuers to ensure that the strategy is managed effectively.

In many cases, the reviews achieve valuable outcomes that put clients in a significant refund position (for previous years) and create land tax savings for future years.

Please contact us for more information should you wish to discuss how we could assist manage your land tax exposure.

This article was written by Craig Gibson, Special Counsel – Commercial.