Absentee Owner Surcharge in Victoria - An Overview

Property ownership in Victoria comes with potential land tax obligations. Individuals or entities classified as 'absentee owners' are subject to an additional surcharge on their land tax liability. 

What is the Absentee Owner Surcharge? 

Absentee owner surcharge is a supplementary tax imposed on Victorian land held by individuals or entities whom are not considered Australian residents for taxation purposes. Current surcharge rate is 4% effective from 2024 land tax year, having been incrementally increased from 0.5% in 2016, to 1.5% from 2017 to 2019, then to 2% from 2020 to 2023. It is levied in addition to the general land tax and any applicable trust surcharge rates. 

Who is considered an Absentee Owner? 

An absentee owner can be an individual, a corporation, or a trustee of a trust fulfilling specific criteria defined by State Revenue Office (SRO). 

An absentee individual is defined as someone who: 

• is not an Australian citizen or permanent resident; 

• does not ordinarily reside in Australia; and

• was either absent from Australia on December 31st of the previous year or absent from Australia for over 6 months in total during the previous calendar year. 

When does the surcharge apply? 

Absentee owner surcharge is applicable if an individual or entity is classified as an absentee owner on December 31st. It is calculated based on the total taxable value of all Victorian landholdings and is incorporated into the land tax assessment. 

Exemptions and Thresholds 

Absentee owner surcharge is not applicable if: 

• The land is exempt from land tax;

• The total taxable value of the land is below $50,000 for individuals or $25,000 for trusts; or 

• The owner is an Australian citizen or permanent resident. 

It is important to note that exemptions from the surcharge are limited, and residential property investors are generally not eligible. 

Notifying State Revenue Office and Changes to Status 

Absentee owners are obligated to notify SRO of their status by January 15th of the following year through Absentee Owner Notification Portal, and any changes to an individual's or entity's absentee owner status must also be updated. Failure to comply may result in penalties. 

You can consult SRO guidelines for more information regarding the absentee owner surcharge and/or seek professional tax advice about your status and obligation.

Disclaimer: This overview is intended for general informational purposes only and should not be construed as a substitute for professional tax advice.