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victorian land tax: is 2020 a year of possible reductions?

18 February 2020
craig gibson
Read Time 3 mins reading time

The Victorian State Revenue Office (SRO) has begun issuing land tax assessments for the 2020 year.

Landowners are encouraged to carefully scrutinise and review their 2020 land tax assessment notices, having regard to the appropriateness of their properties’ values and any potential errors in the assessment notice.

In respect of valuations, a weaker residential property market over the 2018 calendar year has resulted in an unusual set of circumstances compared to prior years, where values used to calculate land tax are forecast to decline in the 2020 land tax year (which utilises valuations conducted as at 1 January 2019 – just after the downturn). Landowners are encouraged to consider their valuations carefully in this light, as an unchanged level of value from 2019 may in fact be an overassessment given the downturn.

A less positive development for landowners though in 2020 is the effective removal of an exemption for land adjoining a landowner’s principal place of residence in metropolitan Melbourne. Any adjoining land which is separately titled but previously enjoyed an exemption will now be subject to land tax (such as land utilised as a tennis court).

Penalties apply for not notifying the SRO of an error such as the continued enjoyment of an exemption a taxpayer is not entitled to. However, the SRO also commonly makes errors that if rectified, results in a reduction in land tax (and in some cases, sizeable refunds).

common errors or other issues to look out for include:

  • land incorrectly appearing on, or missing from, a taxpayer’s assessment;
  • a taxpayer being assessed for its multiple landholdings on different assessments (rather than a single combined 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) – applying generally where a property has been unoccupied for six months or more;
  • exemptions being incorrectly applied or overlooked; and
  • trust nominations no longer being financially prudent.

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 available savings in land tax. We also work with a number of valuers to ensure clients’ land valuation reviews are managed effectively.

In many cases, these reviews achieve valuable outcomes that put clients in a significant refund position (for previous years) and create land tax savings for future years, or otherwise ensure clients are avoiding future land tax reassessment surprises (with penalties and interest).

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

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victorian land tax: is 2020 a year of possible reductions?

18 February 2020
craig gibson

The Victorian State Revenue Office (SRO) has begun issuing land tax assessments for the 2020 year.

Landowners are encouraged to carefully scrutinise and review their 2020 land tax assessment notices, having regard to the appropriateness of their properties’ values and any potential errors in the assessment notice.

In respect of valuations, a weaker residential property market over the 2018 calendar year has resulted in an unusual set of circumstances compared to prior years, where values used to calculate land tax are forecast to decline in the 2020 land tax year (which utilises valuations conducted as at 1 January 2019 – just after the downturn). Landowners are encouraged to consider their valuations carefully in this light, as an unchanged level of value from 2019 may in fact be an overassessment given the downturn.

A less positive development for landowners though in 2020 is the effective removal of an exemption for land adjoining a landowner’s principal place of residence in metropolitan Melbourne. Any adjoining land which is separately titled but previously enjoyed an exemption will now be subject to land tax (such as land utilised as a tennis court).

Penalties apply for not notifying the SRO of an error such as the continued enjoyment of an exemption a taxpayer is not entitled to. However, the SRO also commonly makes errors that if rectified, results in a reduction in land tax (and in some cases, sizeable refunds).

common errors or other issues to look out for include:

  • land incorrectly appearing on, or missing from, a taxpayer’s assessment;
  • a taxpayer being assessed for its multiple landholdings on different assessments (rather than a single combined 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) – applying generally where a property has been unoccupied for six months or more;
  • exemptions being incorrectly applied or overlooked; and
  • trust nominations no longer being financially prudent.

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 available savings in land tax. We also work with a number of valuers to ensure clients’ land valuation reviews are managed effectively.

In many cases, these reviews achieve valuable outcomes that put clients in a significant refund position (for previous years) and create land tax savings for future years, or otherwise ensure clients are avoiding future land tax reassessment surprises (with penalties and interest).

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