Significant changes to Victoria’s property tax landscape have arrived following the enactment of the State Taxation Further Amendment Act 2025. These updates reshape how stamp duty and land tax apply to commercial property, residential ownership, and certain exemptions. Here’s a breakdown of what’s new.
Commercial and Industrial Property Tax (CIPT) Takes Effect
One of the most transformative changes is the introduction of the Commercial and Industrial Property Tax (CIPT) regime, which commenced on 1 July 2024. This reform gradually phases out transfer duty for commercial and industrial property.
Under this regime, a property enters the scheme when 50% or more is sold or transferred. One final round of duty is paid, and future transactions become duty-free, provided the property maintains its commercial or industrial use. After a 10-year transition, an annual tax of 1% of the site value (or 0.5% for build-to-rent developments) applies instead.
Recent amendments now ensure that full duty must be paid (without concessions or exemptions) when property enters the regime. This closes a loophole where low-value transactions—like property partitions—could trigger CIPT entry on minimal duty.
Residency Rules Tightened for NZ Citizens
New Zealand citizens, who often reside in Australia on a special category visa, were previously subject to inconsistent tax outcomes. The new rules align their treatment for:
-
Foreign Purchaser Additional Duty (FPAD): Exempt if they ordinarily reside in Australia for at least six months within 12 months before or after the transaction.
-
Absentee Owner Surcharge (AOS): Exempt if they ordinarily reside in Australia or meet a presence test.
New Exemptions for Landowners
Victorian land tax laws now include several new exemptions:
-
Vacant Residential Land Tax (VRLT): Properties undergoing renovation or repair are exempt for one year.
-
Non-permanent shelter exemption: Land containing a non-permanent structure used as the owner’s residence may now be exempt from land tax.
-
Transfer to custodians: A new transfer duty exemption applies where dutiable property is transferred to a custodian, likely aiding structures involving trusts and managed funds.
These reforms aim to modernise property taxation, improve fairness, and close technical loopholes. Property owners, investors, and advisors should review their positions and seek advice where needed to ensure compliance under the new rules.