All residential land in Victoria is now caught unless an exemption is available. Prior to 1 January 2025, vacant residential land tax (VRLT) was contained in the inner and middle regions of Melbourne.

What is residential land?

Broadly, residential land includes the following:

· Land with a home on it.

· Land with a home on it that is being renovated or where a former home has been demolished and a new home is being constructed. Noting that if a building permit is required, land will be considered ‘vacant’ after two years has elapsed since the building permit was issued. Thus a building permit can assist with the period of renovation and construction if the property would otherwise be vacant.

· Land with a home on it that has been uninhabitable for 2 years or more.

The following are not considered residential land:

· Unimproved land (ie, land without a home on it). However, unimproved land will be included as residential land from 1 January 2026.

· Land that is commercial residential premises (eg, a hotel, motel or caravan park).

· Land that is a residential care facility or a retirement village.

What if an exemption applies to VRLT?

We discuss the possible exemptions to VRLT in our article here. We note that a popular exemption is the holiday home exemption (HHE). This exemption applies where the property was U+O as a holiday home for at least 4 weeks by either the owner or their relatives in the prior calendar year. Furthermore, legislative changes in mid-2024 allow for property held in trusts and companies to qualify for the HHE provided certain criteria is met. Please see our article here for more information.

Nevertheless, even if an exemption applies, the owner is still required to notify the SRO. This is due to the notification requirement hinging off whether the land has been U+O for more than 6 months in the prior calendar year (i.e., meeting the definition of ‘vacant’).

When completing the notification process through the SRO’s online portal, the owner will have the option to select whether an exemption applies. Evidence must be kept throughout the year to be available if the SRO ever queries the property’s ‘exempt’ status. Naturally, you should always make sure that you have sufficient and appropriate evidence to support your position. Furthermore, the SRO outlines that this evidence should be kept for at least 5 years.

Do you have to notify the SRO each year?

The SRO website states that if the property owner has notified the SRO of a property in a previous year, and the circumstances under which this notification was made have not changed, the property owner will not be required to submit a subsequent notification. Thus, if you have notified the SRO of your vacant property that benefits from the HHE for the 2025 year, you do not have to lodge another notification for 2026 onwards provided your circumstances have not changed.

However, you will need to notify the SRO if the circumstances of your properties have changed, this includes if:

· The previously notified vacant property has become occupied or has become eligible, or ceased to be eligible for an exemption; or

· The property has become a residential property during the previous 2 calendar years and ownership has remained unchanged during that time.

The SRO may contact the property owner or agent to request more information or supporting evidence to support an exemption.

Objecting to a VRLT assessment

If the property owner has issues with the VRLT assessment, they have 60 days to object. An objection is a formal process and must be in writing, with full and detailed grounds of objection, including supporting documents.

Furthermore, the property owner can object to the capital-improved value of the land that the VRLT is based on.

If you wish to object to a VRLT assessment, DBA Lawyers would be pleased to help prepare your objection.

Notifying the SRO

Either a property owner or an authorised representative (e.g., accountant, lawyer or estate agent) can make the notification submission to the SRO via the online portal available on the SRO website. This should be done for residential properties that were not U+O for more than 6 months for the calendar year commencing 1 January 2024. Furthermore, the primary contact for any future correspondence with the SRO, including who receives the VRLT assessment, can be set through the SRO’s online portal.

Where a property owner owns multiple properties, they can notify the SRO for all properties in a single submission. This assumes that the ownership structure is the same for all those properties. However, if, for example, ‘Person A’ owns one property on their own and another property jointly with ‘Person B’, then two separate submissions are needed, ie, one for each property.

What if I don’t notify?

Failure to notify the SRO can result in the property owner being subject to additional tax and penalties. The Tax Administration Act 1953 (Vic) sets a fixed penalty scale, with additional power vested in the Commissioner to adjust the penalty rate up and down to reflect the level of culpability.

The SRO conducts monitoring and compliance activities to make sure that vacant properties are being declared. This includes comparing data with other state and federal agencies including the ATO. Furthermore, the SRO actively requests that people ‘dob-in’ their neighbours and any properties where the individual suspects that a property owner is not complying with their obligations.

Conclusion

A property owner is required to notify the SRO for all vacant residential land they own. Given the extension of the VRLT to all of Victoria and the minimal publicity that VRLT has gained, we recommend that accountants and advisers including lawyers let their clients know of the above requirements. Failure to comply can result in additional tax and penalties. Finally, we recommend that notifications be made in November or early December at the latest. Many are likely to be away in late December and early January on holidays and may easily overlook the 15 January deadline.