Big changes to land tax rates have been announced in Victoria’s 2023-2024 State Budget (released Tuesday, 23 May 2023).
As we all know, the COVID pandemic sent shockwaves through economies big and small. To counter the pandemic emergency, Victoria borrowed billions of dollars from the Reserve Bank of Australia to prevent economic scarring.
To repay the $31.5 billion borrowed debt, the 2023-2024 State Budget introduced a COVID Debt Repayment Plan.
As a part of the COVID Debt Repayment Plan, a COVID Debt Levy will be introduced during the next financial year 2023-2024. This COVID Debt Levy will be targeted towards big businesses, investors and those who pay land tax, and is expected to end in 10 years’ time.
The three main aspects of the COVID Debt Repayment Plan includes:
- A range of savings and efficiencies to be implemented across government, totalling $2.1 billion over four years. This includes reductions in corporate and back-office functions, reductions in labour hire and consultancy expenditure, and efficiencies across public non-financial corporations and public financial corporations. These savings are designed to make government more efficient, while maintaining the frontline services that matter to Victorians.
- From 1 July 2023, large businesses with national payrolls above $10 million a year will temporarily pay additional payroll tax. A rate of 0.5 per cent will apply for businesses with national payrolls above $10 million, and businesses with national payrolls above $100 million will pay an additional 0.5 per cent. The additional rates will be paid on the Victorian share of wages above the relevant threshold and are estimated to raise $3.9 billion to repay COVID Debt over four years.
- From 1 January 2024, the tax-free threshold for general land tax rates will temporarily decrease from $300 000 to $50 000. The family home will remain exempt from land tax. Those who pay land tax will attract a temporary additional fixed charge starting at $500 for landholdings between $50 000 and $100 000. There will be a $975 fixed charge for landholdings above $100 000 and the tax rates will temporarily increase by 0.1 per cent for both general and trust taxpayers with holdings above $300 000 and $250 000 respectively.
Read more about the COVID Debt Repayment Plan here.
What does this mean for 2024 Land Tax Rates?
In additional to the existing land tax, a new COVID-19 debt temporary land tax surcharge will apply for ten years. Properties which are already exempt from land tax, include the family home, will remain exempt from these new charges. The additional surcharges are as followed:
General land tax rates:
- For taxable landholdings between $50,000 and $100,000 — a $500 flat surcharge will apply
- For taxable landholdings between $100,000 and $300,000 — a $975 flat surcharge will apply
- For taxable landholdings over $300,000:
- a $975 flat surcharge
- an increased rate of land tax by 0.10 percentage points.
Trust surcharge land tax rates:
- For taxable landholdings between $50,000 and $100,000 — a $500 flat surcharge will apply
- For taxable landholdings between $100,000 and $250,000 — a $975 flat surcharge will apply
- For taxable landholdings over $250,000:
- a $975 flat surcharge
- an increased rate of land tax by 0.10 percentage points.
Read more about the changes from the State Revenue Office Victoria here.
Date revised: 24 May 2023