News & Insights

The State Revenue Office of Victoria (SRO) will shortly be rolling out the 2025 Victorian land tax and vacant residential land tax (VRLT) assessments, but you don’t always have to accept its finding.

There are many instances that warrant an objection to a land tax and vacant residential land tax assessment and as an expert in Victorian state tax laws, Thomas Abraham is well aware which ones are worth the fight. Thomas highlights 10 common grounds on which an objection to land tax and VRLT assessments can be lodged.

10 common land tax and VRLT assessment objections

1. Vacant Residential Land Tax

While the VRLT regime has now been expanded to the entire State of Victoria commencing on 1 January 2025, it does not mean that all residential land that was not occupied for 6 months or more is automatically subject to the expanded VRLT regime.

Land that is exempt from land tax, not residential land or not vacant should not be subject to VRLT.

In addition, if any of the VRLT exemptions, such as the holiday home exemption applies, VRLT should not apply.

An objection to a VRLT assessment can be lodged if land is not vacant residential land or if a VRLT exemption applies.

2. Land tax exemptions or concessions applicable

The Land Tax Act 2005 (Vic) (Act) contains numerous land tax exemptions and concessions that provide relief from a land tax liability with the more common land tax exemptions/concessions noted below:

• Principal place of residence
• Absence from principal place of residence
• Construction and renovation
• Primary production land
• Charitable land
• Land owned by non-profit organisations, racing/non–racing clubs
• Social housing
• Rooming houses
• Caravan parks
• Retirement villages

3. Land tax: Incorrect site value

Land tax is payable based on the site value of land. This means the value of the land not including any improvements on the land.

An objection to the site value of land can be lodged if there is a reasonable discrepancy in quantum from what the site value should actually be.

4. Vacant Residential Land Tax: Incorrect capital improved value

Unlike land tax, VRLT is assessed based on the capital improved value of land. This means the value of the land factoring in any improvements on the land.

An objection to the capital improved value of land can be lodged if there is a reasonable discrepancy in quantum from what the capital improved value should actually be.

5. Grouping of related corporations not applicable

The Commissioner of State Revenue (Commissioner) has powers to group land held by corporations under Division 3 of Part 3 of the Act.

An objection to a land tax assessment grouping related corporations can be submitted if the grouping provisions do not apply.

Additionally, an objection can also be lodged seeking the Commissioner’s discretion not to group the corporations under the relevant provisions.

6. Absentee owner surcharge

The absentee owner surcharge (AOS) provisions apply if a land owner is considered an absentee owner for the purposes of the Act.

Accordingly, an objection can be lodged if a land owner does not meet the definition of an absentee owner, be it a natural person absentee, an absentee corporation or an absentee trust.

Further, the AOS regime also contains respective exemptive provisions which provide an exemption from AOS if it can be established that the landowner makes a significant contribution to the Victorian economy (among other factors).

7. Ownership errors

A land tax liability is borne by the owner of land, who generally is the registered proprietor of the land.

In certain circumstances, a land tax assessment may be issued to the wrong owner or combination of owners.

Similarly, a land tax assessment may be issued to the correct legal entity but in the wrong ownership capacity (ie corporation in its own right rather than as a trustee corporation).

In each circumstance, an objection should be lodged so that the land tax liability is issued to the correct owner of land.

8. Land errors

Errors in the land(s) assessed typically occur if there has been a change in ownership, change in ownership capacity or if the description of the land has changed due to processes such as a subdivision of the land.

An objection should be lodged with the SRO to ensure that the land tax liability noted on the relevant assessment reflects the correct landholdings of the land owner.

9. Land tax trust surcharge

While land held by a trust is generally subject to the higher rate of the land tax trust surcharge, there are instances where the trust surcharge should not apply.

Commonly, the land tax trust surcharge should not apply if a relevant principal place of residence or beneficial ownership notification has been lodged with the SRO.

When the land tax trust surcharge has been erroneously applied, an objection can be lodged seeking that the trust surcharge applied be removed such that the general rate of land tax (or no land tax in certain circumstances) is applied.

10. Land has been disposed

Land tax for a particular tax year applies based on the ownership of land as at midnight on 31 December of the preceding year.

In instances where land has been disposed (ie owner of land no longer the registered proprietor of land) prior to the liability date, a land tax liability should not be incurred.

Additionally, there are provisions in the Act which provide that even though land is owned by one owner, land tax can be applied to a separate deemed owner if certain conditions pertaining to the sale and purchase of land are satisfied.

An objection should be lodged if an owner is no longer the registered proprietor of land as at the liability date or if the relevant provisions deeming ownership on another party applies.

The land tax objection process is highly complex not only due to the strict timeframes involved but also due to the fact that, if an objection does not contain the correct grounds of objection, the SRO is not obliged to issue a decision in the taxpayer’s favour.

Macpherson Kelley’s tax team have specialised knowledge in navigating the land tax objection processes and is here to help you understand how the laws surrounding the land tax objection process apply and provide you with valued advice before lodging  an objection.

Contact us today to discuss how we can assist you in effectively understanding whether a land tax objection should be lodged.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.