The end of the calendar year tends to sweep us all into a whirlwind of holiday plans, Black Friday deals, and gift lists. But for property owners, it is also a time to check in on a few key tax matters. While most federal tax deadlines hit in June, several key matters—especially in Victoria—deserve attention before you can truly unwind with that glass of eggnog. Here are three important property related tax issues you should keep in mind:

Holiday homes and Vacant Residential Land Tax (VRLT): notifications by 15 January 2025

As we previously detailed here Victoria’s Vacant Residential Land Tax (VRLT) has expanded from specific inner-city zones to all residential land in the state. If your property was vacant for six or more months this year, it may now be subject to VRLT unless an exemption, like the holiday home exemption, applies.

The VRLT rate is based on the property’s capital improved value:

• 1% for land newly liable for VRLT,
• 2% for land previously liable in the preceding year.

VRLT notifications must be submitted to the State Revenue Office (SRO) by 15 January, so it is important to consider them before switching on your out of office this festive season. Importantly – notifications must also be made those who are eligible for the holiday home exemption.

If you are unsure about your property’s status or exemptions, reach out to our team for assistance. With VRLT as for other taxes described below, severe penalties and interest apply for non-compliance and the Victorian State Revenue Office (SRO) has actively stepped up its audit and review program to bolster revenue collection.

Short Stay Rental Levy (SSAL): coming 1 January 2025

Introduced in the 2024-25 Victorian State Budget (our full report here), the SSAL applies a 7.5% levy on short-stay bookings (fewer than 28 days) beginning 1 January 2025.

This levy covers the entire booking fee, including cleaning and GST (but excludes credit card fees). However, there are some exemptions: your principal residence, for example, is not subject to SSAL, so renting your home while away over the holidays will not trigger the levy. Reach out to our team if you are unsure which exemptions may apply to you.

In terms of reporting, if you use a platform like Airbnb, the platform will handle the SSAL. However, for direct bookings with you:

• Annual returns apply if short-stay earnings are below $75,000.
• Quarterly returns are due if they exceed $75,000, with the first due by 30 April 2025.

Only bookings both made and completed on or after 1 January 2025 incur the SSAL.

Preparing for increased litigation

The 2024-25 Victorian State Budget (our full report here) provided increased resources for the SRO and we are seeing property-related litigation on the rise. Key areas to watch include:

• Acquiring Property as Trustee – the importance of clear documentation.[1] A recent Supreme Court case has highlighted the need for clear and precise documentation when purchasing property as a trustee. Without explicit trustee status stated in contracts and all surrounding documents including trust deeds, ambiguities can arise. Reach out to one of our specialists to ensure your trust capacity is well-documented to avoid penalties on audit.
• Primary Production and Land Development – ensuring exemptions apply:[2] The application of the “primary production exemption” has been the subject of much litigation across Australia in recent years and is a clear target for the SRO. A recent Supreme Court case upheld a $3.5m land tax assessment due to insufficient involvement in the primary production activities by a particular shareholder (relevant for that primary production exemption) Additionally, Revenue Ruling LTA 006 (version 2) has new guidelines on preparatory works. Therefore, if you plan to develop primary production land, reach out for guidance on proper compliance with both state and federal provisions and guidance to avoid costly assessments upon audit.
• Landholder Duty Triggered on Capital Raising: The Victorian Court of Appeal has confirmed[3] that landholder duty applies to separately acquired shares under a capital raising under the aggregation provisions. Any property-holding companies or trusts may therefore face duty on the property purchase and then on a subsequent share or unit issue – effectively doubling the stamp duty. An insidious trap which can lawfully be avoided with careful planning upfront. For guidance on managing duty implications in similar arrangements, reach out to our team.

Wrapping it all up

The holiday season may come with a mountain of to-dos, but taking a moment to review your tax responsibilities can save you from costly surprises in the New Year. If you have any questions—or an audit needing specialised attention—our team is here to help, please reach out to a member of our Tax & Structuring team.