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State Taxation Further Amendment Act 2024

Property Law: 23 January 2025

Author: Lauren Woolley - Our People

On 3 December 2024 the State Revenue Office announced a number of changes to Victoria’s taxation laws to come into effect from now until 1 July 2025. This article provides a summary of those amendments relating to land tax and stamp duty.

Vacant Residential Land Tax

Holiday Home Exemption - Trusts and Companies

Vacant Residential Land Tax (VRLT) currently applies to residential property that was vacant for more than 6 months in the preceding calendar year. An exemption to VRLT applies when a property is used and occupied by the owner as their holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year.

From 1 January 2025 the scope of the holiday home exemption will be extended to include land owned by a company or a trustee of a trust. The sole shareholder of a landowning company or trustee of a trust is eligible for this exemption if:

  • the sole shareholder has continuously owned the home, or the home has been continuously subject to the same trust, since 28 November 2023;
  • there have been no changes in beneficial ownership of the land since 28 November 2023, except for transfers between relatives or transfers for the purpose of making a change to the trustee; and
  • one or more eligible natural persons used another property in Australia as their Principal Place of Residence (PPR) in the preceding tax year and used and occupied the holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year as follows:

Owner of Land

Natural persons who must have a PPR in Australia

Natural Persons who must occupy holiday home

Corporation

Shareholders who owned, directly or indirectly, at least 50% of the shares in the company

The shareholders or their relatives

Trustee of unit trust scheme

Unitholders who owned, directly or indirectly, at least 50% of the units in the scheme

The unitholders or their relatives

Trustee of fixed trust

Beneficiaries who held, directly or indirectly, at least 50% of the beneficial interest in the trust property

The beneficiaries or their relatives

Trustee of discretionary trust

Specified beneficiaries of the trust or their relatives

The specified beneficiaries or their relatives

Holiday Home Exemption - Deceased Estates

Also coming into effect on 1 January 2025 in relation to VLRT is an extension to the Holiday Home Exemption to apply after the owner of the home or sole shareholder of a company that owns the home passes away. To be eligible for the exemption a relative of the owner or sole shareholder must:

  • use and occupy other land in Australia as their PPR, and
  • use and occupy the holiday home for a period of at least 4 weeks (whether continuous or aggregate) in the calendar year.

The exemption will continue to apply until the earlier of:

Owner

Sole Shareholder

  • the third anniversary of the owner’s death (or the expiry of a further period approved by the Commissioner); or
  • the day on which the owner’s interest in the land vests in another person under a trust; or
  • the day on which the owner’s interest in the land vests in a person (other than the person's personal representative) under the administration of the person's estate
  • the third anniversary of the shareholder's death (or the expiry of a further period approved by the Commissioner) or
  • the day on which the shares in the corporation are transferred to another person (other than the person's personal representative) under the administration of the person's estate


Alpine Property

From 1 January 2025, the Land Tax Act 2005 is amended to exclude land located in alpine resort areas in Victoria from the imposition of VRLT.

The definition of an alpine resort in section 3(1) of the Land Tax Act 2005 will be amended to have the same meaning as in the Alpine Resorts Act 1983.

Commercial and Industrial property tax reform

On 1 July 2024 Stamp Duty on commercial and industrial properties was replaced with an annual Commercial and Industrial Property Tax (CIPT).  The tax is calculated as 1% of the property’s unimproved value and operates like land tax, in that land that is exempt from land tax will normally be exempt from CIPT.

Commencing from 4 December 2024, the amendments introduce new upfront duty exemptions and concessions for certain non-standard transactions where appropriate duty has previously been paid as part of the land entering the CIPT scheme. Prior to the amendments, a duty exemption or a reduction in duty was not available for a non-standard transaction.

A dutiable transaction is a non-standard transaction if the tax reform scheme land has a qualifying use under the CIPT and generally relate to dealings with leases and economic entitlements in relation to tax reform scheme land.

Pensioner and concession card holder duty

The current pensioner and concession card stamp duty reduction was amended from 4 December 2024 to apply to the purchase of a home by the guardian of a person with a legal disability who is an eligible cardholder, or to the purchase of a home by the trustee for a special disability trust where the principal beneficiary is an eligible cardholder.

Equivalent amendments will also occur to the first home buyer duty concession or exemption in similar circumstances where the principal beneficiary is a first home buyer. Similarly, the first homeowner grant will now be eligible to be paid on the purchase of a home by the trustee of a special disability trust where the principal beneficiary is an eligible first home buyer.

Friendly societies

From 1 January 2025 stamp duty exemptions for friendly societies was be abolished. 

Land Tax Act 2005

A new land tax exemption is available from 1 January 2025 for land that is owned, controlled or managed by a charitable institution which is occupied or available for occupation by a resident exclusively in connection with the institution's charitable purpose to relieve poverty.

The exemption is not intended to apply to charities that provide housing to people who are not in need of relief from poverty, old age or impotency, even if the housing is provided at an affordable rate. 

The new exemption is also available to vacant land owned by a charitable institution and declared to be held for the future use and occupation as poverty relief within 2 years, or a longer period approved by the Commissioner.

If you have any questions regarding the State Taxation Further Amendment Act , consult with one of our experienced Property Lawyers.

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