Victorian Land Tax

Readers of this regular Newsletter will know that we brought the likely dramatic increases in Victorian Land tax to your notice in September 2022.

The Government centralised valuation assessments to achieve better consistency of application and with increased valuations (maybe attributed to COVID) and no change to the progressive rate scales of ten years ago huge rises in Land tax were forecast.

Tax increases of 300% in some cases – many have doubled.

In the example we published last year – a modest holiday house on the Mornington Peninsula – land tax

• 2019   $3,615.00
• 2020   $4,415.00
• 2021   $4,575.00
• 2022   $6,815.00
• 2023 $19,295.00

Now there is an additional impost announced in the Victorian State Budget.

This latest announcements adds another $3,415.00 to this property – allegedly being  a surcharge to fund repayment of the COVID debt although no prediction of immediate reduction in State debt.

The new rates announced are:

General land tax rates

• For taxable landholdings between $50,000 and $100,000 — a $500 flat surcharge will apply
• For taxable landholdings between $100,000 and $300,000 — a $975 flat surcharge will apply
• For taxable landholdings over $300,000:

-  a $975 flat surcharge
-  an increased rate of land tax by 0.10 %
-  an increased rate of land tax by 0.10 percentage points.

Other land tax amendments include:

• The threshold at which taxable land is assessed has been lowered from $300,000 to $50,000 – one might as why bother having a threshold
• Absentee owner surcharge rate will increase from 2% to 4%
• The land tax exemption for principal places of residence under construction or renovation will be expanded to provide the Commissioner of State Revenue with discretion to extend period by two years if builder goes into liquidation.
• A new land tax exemption will apply to land protected by a conservation covenant with Trust for Nature.
• A new land tax exemption will apply to land owned by an immediate family member and used as the home of an individual eligible to be a beneficiary of a special disability Trust, including where a special disability trust has not been established.

Victorian Payroll Tax

The payroll tax-free threshold will be increased:

• commencing 1 July 2024 — from $700,000 to $900,000
• commencing 1 July 2025 — to $1,000,000.

The deduction associated with tax-free threshold will begin phasing out for every dollar of wages above $3 million. This means businesses with wages above $5 million will not receive any benefit associated with the payroll tax-free threshold.

Payroll tax exemption for high-fee non-government schools to be removed.