Butler said owners and operators of off-street car parking spaces in the Melbourne CBD and surrounding suburbs are liable to pay an annual congestion levy unless an exemption or concession applies.

“This is a real disaster for many seeking to rent commercial property as there are many commercial offices vacant and in some areas the vacancy rate is nearing 50 per cent, yet the Victorian government expects there is plenty of money to collect,” he said.

The congestion levy in Victoria is proposed to increase from this month with category 1, for spaces located in the CBD, rising from $1,750 to $3,030 and category 2, located in surrounding suburbs, from $1,240 to $2,150.

“These are increasing by over 70 per cent,” he said.

The congestion levy applies to a car space used for business purposes within the prescribed area.

A parking space will attract the levy where it is a “parking space” that is not exempt and is located within the “levy area”.

Butler continued that a “parking space”, as defined in the CLA, is a space set aside or used for the parking of a motor vehicle, whether or not the space is used for the parking of a motor vehicle and whether or not the space is permanently delineated as such. This does not include street parking available to the public.

“The levy assessment is calculated based on the use of parking spaces in the preceding calendar year. This means how you use your parking spaces during the 2025 calendar year will contribute to your 2026 return and assessment.”

There are some exemptions from the levy including a car park used for residential parking, however, a residential car park in the prescribed area that is leased to a commuter is subject to the levy.

A car park used exclusively for visitors including clients, customers or consultants provided the premises are not the person’s usual place of business or work is also exempt, as is a car park used for disabled persons or emergency vehicles.

A part-year concession may apply where a parking space becomes exempt or is not capable of being used for a period/s of more than 30 days, such as where the car park space is being set aside for building works.

He continued that landlords will need to collect these new charges from tenants during 2025.

“However, the increase is currently only proposed and the legislation will need revising and may take some time. Sec 11 of the Congestion Levy Act 2005 (Vic) currently indexes the levy each year by CPI,” he said.

“I suspect this will have wide application to landlords and is another adverse impact on property in Victoria.”

Butler said the imposition of this tax, the short stay levy and the Vacant Residential Land Tax that begins this month goes against the commitment the federal and state governments made in 2000 that the GST would help abolish many state taxes.

“The GST was introduced in mid-2000 to replace numerous inefficient state taxes. However, both federal and state taxes on property have expanded considerably since then, making the holding and development of property in Victoria complex and less profitable,” he said.

“Due to this complexity property owners, including SMSF trustees, will need to seek advice more often and advisers will need to stay on top of these issues to be able to provide appropriate guidance on these taxes.”