By Andrew Spalding, Partner and Marina Raulings, Partner
The 2020 land tax assessments are due to be issued by the Victorian State Revenue Office to taxpayers from 28 January 2020 onwards. Between January and May 2020, it will send close to 510,000 land tax assessment notices to taxpayers. Most taxpayers either don’t analyse their assessments for errors or potential exemptions, or do so too late, and miss out on the ability to challenge their assessment.
Below is a summary of the key items you should check, the deadlines for challenging your assessment, and what you can do to manage increasing land tax costs on your property portfolio:
- Is the taxpayer the owner of all the properties listed? If you have sold properties on or prior to 31 December 2019, or they are owned by another taxpayer (eg by a trust), then the SRO should be notified of the error. This can result in land tax savings, where properties have been incorrectly grouped together under the wrong taxpayer.
- Is the valuation too high? If you think that the Council has got it wrong, you should challenge the valuation. Generally, valuations are based on desk top data of general sales in your area around the relevant valuation date (being 1 January 2019). If your property is unique (eg subject to heritage overlays; listed on Victorian heritage register; subject to unusual characteristics such as near a railway line), then the general sales data is not “comparable”, and a correct valuation should involve specific sales data or a discounted value. In some cases, upon a challenge, Councils will revise valuations without the need to submit an alternative valuation, and in other cases, may require the taxpayer to provide a supporting alternative valuation report.
- Have you been incorrectly denied an exemption from land tax? Common exemptions that could apply and should be investigated further if relevant are as follows:
- Have you used or intend to use the property as your principal place of residence?
- Is the property used or being prepared for use for primary production activities?
- Is the property owned by a charitable entity and used for charitable activities?
- Is the property used for sporting, recreational or cultural activities?
- Is the property used for residential care or services or as a retirement village, or is a building being constructed on the land for such purpose?
- Is the property a rooming house for low cost accommodation?
- Has the owner of the property recently deceased, and was previously using the property as their PPR?
- When should I make a claim? Any claims you have against the assessment should be lodged by way of “objection” within 60 days of the date of the assessment, to ensure your rights to challenge the assessment are not waived.
- My assessment is correct, but still involves significant land tax costs, what should I do? If your assessment is correct but involves significant land tax costs, this may be due to holding properties in a trust (which attracts the higher surcharge rates of taxing) and/or due to multiple properties being held by the one taxpayer and “grouped”. We can assist you with a review of your land tax position and future tax planning.