Each year between January and April, the Victorian State Revenue Office (“SRO”) will issue land tax assessments based on the total taxable value of all the land you own in Victoria, excluding exempt land such as your principal place of residence.
The assessment is based on land that you owned as at midnight on 31 December in the year preceding the assessment year and you will be required to pay this tax if the value of all other land owned in Victoria is equal to or exceeds $250,000.00.
With the period that the SRO will issue the 2020 land tax assessments fast approaching, it is important to understand how these assessments are made and what you should do if you believe you have received a land tax assessment which is higher than it should be.
How it works
Many land owners were surprised to have received increased land tax assessments in 2019 with a notable softening of the Victorian property market in 2018. Many expected the 2019 assessment to show little, if any, increase in the site value of land.
It is important to note that this year’s land tax assessment uses the value of your land at 1 January 2018. This would mean it would have reflected the market conditions prior to the downturn.
Currently land valuations are prepared by local councils every two years. In order to combat the volatility associated with conducting valuations every two years, from 2020 the valuation regime will be taken away from local councils and will move to an annual valuation cycle to be undertaken by the Victorian Valuer-General.
Your 2020 assessment will be the value of your land at 1 January 2019 and will reflect market conditions as at that date.
Objecting to your land tax assessment
Objections must be lodged within a strict 60 day timeframe from the date of service of the notice. If you’re outside of the 60 day time frame then you can make an application for an out of time objection, although the SRO does not have to accept it.
These objections can be prepared electronically using the smart form available on the SRO website.
Land owners can object upon two different grounds (or a combination of both):
- The legal basis on which the SRO assessed land tax;
- The site valuation on which a land tax assessment is based; or
Some examples of the grounds on which an objection or request for an amendment can be made are:
- A particular exemption was not applied by the SRO (example – principal place of residence);
- You are not the owner of the land assessed;
- The assessment is incorrectly calculated;
You can object to either the site value (for land tax purposes) or the capital improved value (for vacant residential land tax purposes).
Examples of reasons why one would challenge the site value include:
- Value of the land is inconsistent with recent comparable property sales.
- There are certain characteristics that affect its value (for example, noise, access restrictions, shape, size).
- Area, dimensions or description of the land are not correct.
If a land owner wants to object to the valuation, these objections need to be well supported. This could include obtaining expert valuation advice and having access to recent comparable property sales to support your application. The more information you have to support your objection, the better.
It is important to note that if your land tax is due for payment while you are waiting for an outcome on your objection, you should pay that amount on time to avoid the prospect of being charged penalty interest. In the event that an objection is successful, the SRO will refund any overpaid amount together with interest.
Although reassessments can result in a valuation being reduced, land owners should also be well aware that reassessments can lead to a valuation being increased upon review.
Still don’t agree with the SRO decision?
If you have lodged an objection and are still not satisfied with the reassessment outcome, you have the right to refer the matter to the Victorian Civil Administrative Tribunal or the Supreme Court.