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.
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:
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 |
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:
The exemption will continue to apply until the earlier of:
Owner |
Sole Shareholder |
|
|
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.
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.
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.
From 1 January 2025 stamp duty exemptions for friendly societies was be abolished.
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.