Key Victorian Tax Compliance Issues To Watch In 2025-26

If you own property, act for clients in property transactions, run a business that employs staff, or claim state grants and concessions, a few broad tax compliance issues could affect you this year.

Below we outline the other State Revenue Office (SRO) areas to watch and practical steps you can take to reduce risk.

General Land Tax

General land tax is a tax for land owners that they have to pay each year to the government. It applies everywhere in Australia except for Northern Territory. You will get a land tax assessment every year outlining the property you own and how much you will be taxed.

The amount of tax you pay depends on the value of all the taxable land you owned on 31 December the previous year.

What the SRO is looking at:

• Incorrect claims for the principal place of residence (PPR) exemption.
• Misuse of the primary production exemption.
• Land held by trustees and absentee or foreign owners where the ownership or use does not match the claimed exemption.

Getting exemption treatment wrong can lead to unexpected land tax assessments, penalties and interest.

The SRO is increasingly examining ownership structures to make sure exemptions are legitimate and supported by evidence.

How can you prepare?

• Review PPR and primary production claims and hold documentary evidence (utility bills, rates notices, ABN/land use records).
• Check trust deeds and trustee resolutions to confirm the beneficial ownership and the purpose for holding the land.
• If you have absentee or foreign owners in a structure, ensure declarations and records reflect the true control and residency status.
• Ask your adviser to perform an ownership and exemption health check for land holdings.

Vacant Residential Land Tax (VRLT)

The Vacant Residential Land Tax (VRLT) is an annual tax applied to residential properties that are vacant for more than six months in the previous calendar year.

It’s designed to encourage landowners to make better use of existing housing stock and increase housing availability.

What the SRO is looking at:

• Accurate registration and declarations.
• Genuine use of exemptions.
• Timing of vacancy.
• Ownership structures.

How can you prepare?

• Confirm whether VRLT applies for each property and register on time.
• Keep dated evidence: Tenancy agreements, rent ledgers, rates and utility bills, building contracts, sales marketing and travel records.
• Record changes precisely: Document when a property becomes vacant or occupied.
• Review ownership records: Ensure trust deeds and company documents reflect the true control and beneficiaries.
• Get advice for complex holdings or borderline cases and respond promptly to any SRO enquiry.

Absentee Owner Land Tax And Surcharge

A surcharge of 2% applies to Victorian land owned by an absentee owner. If you are an absentee owner at 31 December, the surcharge applies in the following land tax year.

An absentee owner is an absentee person that owns land in Victoria, and can be:

• An absentee individual,
• An absentee corporation, or
• A trustee of an absentee trust.

What the SRO is looking at:

• Who counts as an absentee: Owners who are non‑residents of Australia or absent from Victoria for defined periods, and entities with absentee controllers, are the focus.
• Expect checks that absentee surcharges and disclosure obligations are correctly declared on land tax returns and property transactions.
• The SRO will look through trusts, corporate structures, nominees and related‑party arrangements to identify the ultimate owner or controller and determine surcharge exposure.
• The SRO will test whether the land’s use, income flows and on‑the‑ground facts match any claimed exemptions or concessions (for example, primary production or bona fide business use).

How can you prepare?

• Review owners’ residency and presence in Australia against the SRO’s tests.
• Ensure land tax and surcharge declarations are complete and lodged on time. Late or incorrect filings can lead to penalties.
• Maintain travel records, visa documentation, utility bills, lease records, employment details and other proof that supports claimed residency or exemptions.
• Ensure trust deeds, shareholder registers, nominee agreements and trustee resolutions accurately reflect who benefits from and controls the land.
• Verify eligibility for any exemption or concession and retain supporting documents. Exemptions for temporary absences or certain business uses have strict rules.

Land Transfer (Stamp) Duty

Land transfer duty is a tax paid when you buy or acquire a property in Victoria. It applies to all properties.

What the SRO is looking at:

• Related-party property transfers that may be structured to avoid or reduce duty.
• Incorrect use of exemptions, such as principal place of residence concessions or first home buyer concessions.

Duty is assessed on the true transaction value.

The SRO will scrutinise transactions where the price, terms or arrangement between related parties do not reflect market reality.

How can you prepare?

• Keep contemporaneous valuation records and market evidence for related-party transactions.
• Confirm eligibility before claiming first home buyer or other purchaser concessions.
• Use binding advice from revenue authorities or seek independent valuation reports when deals are unusual.
• Discuss proposed related-party transfers with your adviser early to identify duty exposure and structuring alternatives.

Landholder Duty

Landholder duty is a state tax that can apply when interests in companies or trusts that own Victorian land change hands.

Rather than taxing the land directly, the duty targets transfers or changes in ownership of the entities that control the land.

What the SRO is looking at:

• Capital raisings, changes in ownership and offshore group transactions where a Victorian landholder sits within a corporate chain.
• Whether share transfers or capital events trigger landholder duty obligations.

How can you prepare?

• Map corporate and trust ownership structures to identify potential landholder duty triggers.
• Before completing capital raisings or share transfers, obtain specialist advice about whether the transaction gives rise to duty.
• Keep detailed transactional records and legal opinions that support your position.

Lease Duty

Lease duty is a state tax applied to certain transactions that grant, transfer or assign long-term leases over Victorian land.

It typically applies where the lease has a significant value or duration and is treated similarly to conveyancing duties.

What the SRO is looking at:

• Duty on grant, transfer or assignment of leases, with a focus on caravan parks, lifestyle villages, leasehold estates and leases linked to renewable-energy assets.
• Complex lease structures that may carry unexpected duty liabilities.

Lease duty can be overlooked in transactions that look like ordinary commercial leasing. Certain sectors are now receiving more attention due to specialised leasing models and valuation approaches.

How can you prepare?

• Review lease transactions for potential duty exposure, including assignments and long-term grants.
• Confirm valuation methodology used to calculate duty and retain expert advice for complex or high-value leases.
• Consider duty implications as part of negotiations and transaction structuring.

Other Taxes, Grants and Levies to Keep an Eye On

What the SRO is monitoring:

• Payroll tax compliance, particularly around contractor arrangements and reporting.
• First home owner grant claims – ensuring eligibility and correct documentation.
• A range of levies and smaller state taxes that can catch businesses unprepared.

Even if your main concern has been land tax or VRLT, payroll tax and state grants can trigger significant liabilities and compliance headaches if handled poorly.

How can you prepare?

• Conduct a payroll tax health check, especially if you use contract labour, labour hire or complex pay arrangements.
• Verify eligibility and document evidence for first home owner grant applications.
• Keep abreast of sector-specific levies that may affect your business and ask your adviser to review obligations annually.

Next Steps For Taxpayers

• Keep complete and contemporaneous records. The SRO frequently requests documentary evidence to support exemption claims and transaction values.
• Adopt a proactive review approach – don’t wait for an audit notice. Regular reviews reduce risk and give you time to fix issues.
• Talk to your advisor early when planning transactions or restructures that may involve land, leases or changes in ownership.
• Use independent valuations where value or market comparability is in question.
• Maintain robust corporate governance and trustee documentation for entities that hold land.
• Make use of binding rulings or private rulings where the facts justify certainty on a tax position.

For property owners, trustees and businesses, the practical takeaway is simple: document your position, review your structures and seek advice before you transact. A little pre-transaction planning can prevent costly surprises later.

If you’d like assistance across these areas, our accounting team can help. Contact us to get started.

This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant.