An absentee owner surcharge applies to Victorian land owned by an absentee owner. This surcharge is 4% from the 2024 land tax year (previously 2% for the 2020-2023 land tax years, 1.5% from the 2017-2019 land tax years and 0.5% for the 2016 land tax year).
If you own land with others, you are a joint owner. We assess joint owners for land tax in 2 stages:
Stage 1 - Joint owner assessment
We assess all of the joint owners together on all of their jointly owned land as though they were one person.
Stage 2 - Individual assessment
We assess each owner individually on all the taxable lands they own (in any capacity), including their interest in any jointly owned land.
If you are assessed for tax on the jointly owned land under a joint ownership assessment, we apply a deduction to your individual assessment, which is the lesser of either:
- your share of the tax in the joint ownership assessment (Deduction 1), or
- the amount of tax calculated in your individual assessment for your share in the jointly owned land (Deduction 2).
Absentee owners and joint owner assessments
How the absentee owner surcharge applies to joint owners depends on how many of the joint owners are absentee owners.
If all the joint owners are absentee owners, the surcharge applies to the joint ownership and to each individual owner.
If only some of the joint owners are absentee owners, the surcharge will only apply to the individual absentee owner and not to the joint ownership assessment. A joint owner who is not an absentee owner is not subject to the surcharge.
The following examples illustrate how the absentee owner surcharge applies when:
- All the joint owners are absentee owners - Example A.
- Only some of the joint owners are absentee owners - Example B.
Example A: All owners are absentee owners
At midnight on 31 December of the preceding tax year, John and Indira each own 50% of Property A, an investment property with a taxable value of $330,000.
Indira also owns another property in her own name, Property B, an investment property with a taxable value of $200,000.
Both John and Indira are absentee owners.
John and Indira, as the joint owners of Property A, will be assessed together in the joint ownership assessment.
Indira will be assessed separately as an owner of 50% of Property A and an owner of Property B.
Joint ownership assessment
John and Indira’s joint ownership liability is determined using the total taxable value of their non-exempt land and applying the appropriate rate of land tax.
The taxable value of Property A, the jointly owned land, is $330,000.
The general absentee owner land tax rate for land holdings valued between $300,000 and less than $600,000 is $13,350 + 4.3% of the amount greater than $300,000.
Accordingly, the land tax payable is $14,640, being $13,350 + (($330,000 - $300,000) × 4.3%).
John and Indira both share liability for this amount.
Individual assessment of John
As John does not own any other taxable lands, other than Property A, the deduction is equal to his individual tax liability and so no tax is payable.
As such, we do not issue him with an individual assessment and he only has to pay the joint ownership assessment.
Individual assessment of Indira
As Indira owns other property, she receives an individual assessment which includes all of the taxable land she owns, including the jointly owned land.
There are three steps to calculating Indira’s land tax liability:
- Calculate Indira’s liability on her total land holdings.
- Calculate Indira’s joint ownership deduction.
- Calculate Indira’s individual tax liability by applying the deduction.
Step 1: Calculating Indira’s tax liability before the joint ownership deduction
Calculate the total taxable value of Indira’s land holdings
Indira’s individual land holding, Property B, is valued at $200,000.
The value of Indira’s joint ownership land holding, Property A, is $165,000, being 50% of $330,000.
Accordingly, the total value of Indira’s land holdings is $365,000 ($200,000 + $165,000).
Calculate the tax payable on Indira’s total landholdings
The general absentee owner surcharge land tax rate for land holdings valued between $300,000 and less than $600,000 is $13,350 + 4.3% of the amount greater than $300,000.
The land tax payable by Indira before the joint ownership deduction is $16,145, being $13,350 + (($365,000 - $300,000) × 4.3%).
Step 2: Calculating the joint ownership deduction
Indira is entitled to a joint ownership deduction in her individual assessment. The deduction is the lesser of:
- 50% (proportion of Indira’s share in the jointly owned land) × $14,640 (total amount of land tax assessed on the joint ownership assessment) = $7,320, or
- $165,000 (the value of Indira’s share in the jointly owned land) divided by $365,000 (Indira’s total land holdings) × $16,145 (tax on Indira's total land holdings)) = $7,298.42.
Therefore, Indira is entitled to a joint ownership deduction of $7,298.42.
Step 3: Calculating Indira’s tax liability after deduction
By subtracting the lesser amount of $7,298.42 from the tax on Indira’s total land holdings ($16,145), the land tax payable by Indira as an individual is $8,846.58 (i.e. $16,145 - $7,298.42).
Indira is also liable to pay the joint ownership assessment.
Example B: Some owners are absentee owners
At midnight on 31 December of the preceding tax year, Minh and Therese each own 50% of Property A, an investment property with a taxable value of $330,000.
Therese also owns one other property in her own name, Property B, an investment property with a taxable value of $200,000.
Only Therese is an absentee owner.
As the joint owners of Property A, Minh and Therese will be assessed together in the joint ownership assessment.
Therese will be assessed separately as both an owner of Property A and an owner of Property B.
Joint ownership assessment
Minh and Therese’s joint ownership liability is determined using the total value of their taxable land and applying the appropriate rate of land tax.
The taxable value of the jointly owned land, Property A, is $330,000.
As only Therese is an absentee owner, general rates of land tax apply to the joint ownership assessment. The general land tax rate for land holdings valued between $300,000 and less than $600,000 is $1,350 + 0.3% of the amount greater than $300,000.
Accordingly, the land tax payable is $1,440, being $1,350 + (($330,000 - $300,000) × 0.3%).
Minh and Therese both share liability for this amount.
Individual assessment of Minh
As Minh does not own any other taxable lands, other than Property A, the deduction is equal to his individual tax liability and so no tax is payable.
We therefore do not issue him with an individual assessment and he only has to pay the joint ownership assessment.
Individual assessment of Therese
As Therese owns other property, she receives an individual assessment which includes all the taxable land she owns, including the jointly owned land.
There are three steps to calculating Therese’s land tax liability:
- Calculate Therese’s liability on her total land holdings.
- Calculate Therese's joint ownership deduction.
- Calculate Therese's tax individual liability by applying the deduction.
Step 1: Calculating Therese’s tax liability before the joint ownership deduction
Calculate the total taxable value of Therese’s land holdings
Therese’s individual land holding, Property B, is valued at $200,000.
The value of Therese’s joint ownership land holdings in Property A is $165,000, being 50% of $330,000.
Accordingly, the total value of Therese’s land holdings is $365,000 ($200,000 + $165,000).
Calculate the tax payable on Therese’s total landholdings
The general absentee owner surcharge land tax rate for land holdings valued between $300,000 and less than $600,000 is $13,350 + 4.3% of the amount greater than $300,000.
The land tax payable by Therese before the joint ownership deduction is $16,145, being $13,350 + (($365,000 - $300,000) × 4.3%).
Step 2: Calculating the joint ownership deduction
Therese is entitled to a joint ownership deduction in her individual assessment. The deduction is the lesser of:
- 50% (proportion of Therese’s share in the jointly owned land) × $1,440 (total amount of land tax assessed on the joint ownership assessment) = $720, or
- $165,000 (the value of Therese’s share in the jointly owned land) divided by $365,000 (Therese’s total land holdings) × $16,145 (tax on Therese's total land holdings)) = $7,298.42.
Therefore, Therese is entitled to a joint ownership deduction of $720.
Step 3: Calculating Therese’s tax liability after deduction
By subtracting the lesser amount of $720 from the tax on Therese’s total land holdings ($16,145), the land tax payable by Therese as an individual is $15,425 (i.e. $16,145 - $720).
Therese is also liable to pay the joint ownership assessment.
