The State Revenue Office of Victoria (SRO) issues land tax and vacant residential land tax (VRLT) assessments based on a range of factors, including land ownership, land value, exemptions, trust structures and the use or occupation of the land.
However, an assessment may not always be correct.
If you believe your 2027 Victorian land tax or VRLT assessment is incorrect, you may have grounds to lodge an objection with the SRO. An objection must be based on a valid legal ground and supported by appropriate evidence.
Thomas Abraham, Partner at Verge Legal, has significant experience with land tax objections. In Thomas’ experience, these are the more common grounds as to which a Victorian land tax or VRLT assessment may be challenged.
Vacant Residential Land Tax
VRLT does not automatically apply simply because a residential property was unoccupied.
Whether VRLT applies depends on factors including the nature and use of the land, how long it has been vacant and whether an exemption applies.
Common VRLT exemptions include:
- land that is exempt from land tax, including a principal place of residence;
- qualifying holiday homes;
- property that changed ownership in the previous year;
- land that recently became residential land;
- land incapable of residential development;
- qualifying work accommodation; and
- residences that were under construction, renovation or uninhabitable in the relevant period.
From 1 January 2026, VRLT can also apply to undeveloped land in metropolitan Melbourne that is capable of residential development and has remained undeveloped for a continuous period of five years or more.
If your land has been incorrectly assessed for VRLT, or an exemption applies, an objection may be available.
Land Tax
The Land Tax Act 2005 (Vic) provides various exemptions and concessions that may reduce or eliminate a land tax liability.
Depending on the circumstances, these may include:
- principal place of residence;
- land under construction or renovation;
- primary production land;
- charitable land;
- rooming houses;
- caravan parks;
- retirement villages; and
- other statutory exemptions.
Importantly, the rules applying to the principal place of residence exemption for properties under construction or renovation have changed for the 2027 land tax year.
From 1 January 2027, amendments allow the construction or renovation exemption to apply for up to four years even where the construction works take longer. The amendments also provide greater flexibility regarding the owner’s ability to nominate a commencement date of construction or renovation.
If an eligible exemption or concession has not been applied to your assessment, an objection or amendment may be appropriate.
Absentee Owner Surcharge
The Victorian absentee owner surcharge is an additional surcharge that may apply to Victorian land owned by an absentee owner.
The surcharge has been 4% from the 2024 land tax year and applies on top of the general land tax or trust surcharge rates.
For the 2027 land tax year, the relevant absentee-owner status is generally considered by reference to the owner’s circumstances at 31 December 2026.
The rules applying to absentee individuals have recently changed.
An objection may be appropriate if:
- the owner has been incorrectly classified as an absentee owner;
- the relevant absentee owner requirements are not satisfied; or
- an applicable exemption or exclusion has not been recognised.
Absentee owners also have notification obligations, and failing to notify the SRO within the required timeframe may result in penalties.
Land Tax Grouping
The SRO may group land held by related corporations for land tax purposes where the relevant statutory requirements are satisfied.
Grouping can significantly affect the amount of land tax payable because the taxable value of grouped land may be assessed together.
If you believe the statutory requirements for grouping have not been met, you may have grounds to object.
There may also be circumstances in which the Commissioner has discretion in relation to grouping. The particular corporate structure and circumstances should be reviewed before lodging an objection.
Incorrect Owner or Ownership Capacity
Land tax is generally assessed based on ownership as at midnight on 31 December of the preceding year.
An assessment may be incorrect if:
- the wrong person or entity has been identified as the owner;
- the ownership structure has changed;
- land is held jointly but has been assessed incorrectly;
- land is held by a trustee but the ownership capacity has been incorrectly recorded; or
- the assessment does not reflect the relevant legal ownership.
For example, land held by a company in its own capacity may be treated differently from land held by the company as trustee.
If the assessment identifies the wrong owner or ownership capacity, it may be appropriate to seek an amendment or lodge an objection.
Incorrect Land
Errors can also arise in relation to the land included in an assessment.
This may occur following:
- a sale or transfer of land;
- acquisition of additional land;
- subdivision;
- consolidation of titles;
- changes in ownership;
- changes in ownership capacity; or
- other changes to the description or ownership of the land.
If land that you did not own at the relevant liability date has been included in your assessment, you should raise the issue with the SRO.
The SRO allows taxpayers to make certain corrections through My Land Tax, including removing land that was not owned as at 31 December.
Trust Surcharge Incorrectly Applied
Land held on trust can be subject to different land tax treatment from land held by an individual or company in its own right.
Trust surcharge rates generally apply to taxable land held by certain trusts, although there are circumstances where the surcharge may not apply or where a concession may be available.
Depending on the trust structure, relevant issues may include:
- whether the trust is a discretionary, unit or fixed trust;
- whether the trustee has notified the SRO of beneficial interests or unit holdings;
- whether a principal place of residence beneficiary has been properly nominated; and
- whether the trust has been correctly classified.
If the trust surcharge has been incorrectly applied, or an eligible notification or nomination has not been recognised, the assessment may need to be reviewed.
Valuation
Victorian land tax is imposed on taxable land, with the site value of taxable land determined through the valuation process.
For example, the SRO uses the valuation made on 1 January of the preceding calendar year for the relevant land tax assessment. Accordingly, the 2027 land tax assessment will use the relevant 1 January 2026 valuation.
If you believe the site value used for your 2027 assessment is incorrect, you may lodge a valuation objection.
A valuation objection must generally be lodged within two months of the issue of the assessment notice. The SRO refers the valuation objection to the relevant valuation authority for consideration.
Contact Us
A land tax or VRLT assessment should not be challenged simply because the amount appears high. The assessment should first be reviewed to identify whether there is a valid legal or valuation ground for objection.
At Verge Legal, our state taxation lawyers can assist with reviewing your Victorian land tax or VRLT assessment, identifying potential grounds of objection and advising on the appropriate steps to challenge an assessment.
If you have received a Victorian land tax or VRLT assessment that you believe is incorrect, contact Verge Legal to discuss your circumstances and whether an objection may be appropriate.
The information contained in this article is general in nature and does not constitute legal or taxation advice. The law and administrative practices may change, and the application of the relevant provisions depends on the circumstances of each matter. You should obtain professional advice regarding your specific circumstances before taking action.
Thomas Abraham – Partner at Verge Legal