If you are an absentee owner, an absentee owner surcharge applies to the taxable Victorian land you own. The surcharge is an additional amount and applies over the land tax you pay at general and trust surcharge rates.
This surcharge is 4% from the 2024 land tax year (previously 2% for 2020-2023 land tax years, 1.5% for the 2017-2019 land tax years, and 0.5% for the 2016 land tax year).
An absentee owner includes a trustee of an absentee fixed trust. If you are a trustee of an absentee fixed trust that owns taxable land on 31 December, you must tell us that you are an absentee owner by 15 January the following year. This is important because penalties may apply if you don’t tell us.
A fixed trust is an absentee trust if any absentee person has a beneficial interest in the land subject to the fixed trust. The absentee beneficiary of a fixed trust can be an absentee corporation, a trustee of an absentee trust or an absentee individual.
Land tax for absentee fixed trusts
The amount of land tax payable by a trustee of an absentee fixed trust depends on whether the trustee has notified us of the beneficiaries of the trust or any of the trust land is used and occupied as the principal place of residence of a beneficiary.
Beneficiaries not notified
Where no notification is made, the trustee of an absentee fixed trust will be assessed for land tax at the:
- trust surcharge rates on the trust land, plus the
- absentee owner surcharge rate on the trust land which is held for the absentee beneficiaries.
Example 1
ABC Pty Ltd is trustee of the ABC Fixed Trust, which owns taxable land in Victoria. ABC Pty Ltd has not made a notification of the beneficiaries of the trust. Therefore, it will be liable to the trust surcharge rate of land tax.
The beneficiaries of the ABC Fixed Trust are Bill and Ben, who each hold an equal beneficial interest in the trust land. Bill is an absentee person and therefore the ABC Fixed Trust is an absentee trust. Neither Bill nor Ben owns other land.
ABC Pty Ltd’s 2024 land tax liability
The taxable value of the land held under the ABC Fixed Trust is $1 million and the absentee owner surcharge rate is 4%. The land tax payable by ABC Pty Ltd for the 2024 land tax year is assessed as follows.
- Step 1: Land tax is assessed on the trust land at the trust surcharge rate. The trust surcharge rate for land with a taxable value of $1 million is $8,163.
- Step 2: The taxable value of the land that is held for the absentee beneficiary (Bill) is multiplied by the absentee owner surcharge of 4%. As 50% of the trust land is held for Bill, the taxable value held for Bill is 50% of $1 million = $500,000. The absentee owner surcharge assessed is $500,000 × 4% = $20,000.
The total land tax assessed for ABC Pty Ltd on the trust land is $8,163 + $20,000 = $28,163.
Beneficiaries notified
Where a notification has been made, the trustee of an absentee fixed trust will be assessed for land tax on the trust land at the:
- general land tax rate on the trust land, plus the
- absentee owner surcharge rate on the trust land which is held for the absentee beneficiaries.
Beneficiaries which are absentee owners will pay land tax based on the absentee owner surcharge rates, while beneficiaries who are not absentee owners will pay land tax based on the general rates. The beneficiaries will be entitled to a deduction to avoid double taxation.
Example 2
This example uses the same details as the example above, except that ABC Pty Ltd has made a notification of the beneficiaries of the trust. Therefore, Bill and Ben are each deemed to be the owner of the trust land (in addition to the trustee) for land tax purposes, in proportion to their beneficial interest in the trust land. That is, Bill and Ben are each deemed to be the owner of 50% of the trust land.
ABC Pty Ltd’s 2024 land tax liability
The land tax assessed for ABC Pty Ltd is calculated as follows:
- Step 1: Land tax is assessed on the trust land at the general rate of land tax. Land tax (at general rates) for land with a taxable value of $1 million is $4,650.
- Step 2: The taxable value of the land that is deemed to be owned by the absentee beneficiary (Bill) is multiplied by the absentee owner surcharge of 4%. As 50% of the trust land is deemed to be owned by Bill, the taxable value owned by him is $500,000. The absentee owner surcharge assessed is $500,000 × 4% = $20,000.
The total land tax assessed for ABC Pty Ltd on the trust land is $4,650 + $20,000 = $24,650.
Bill’s 2024 land tax liability
The land tax assessed on Bill (as deemed owner and absentee beneficiary) is calculated as follows:
- Step 1: Land tax is assessed on the trust land deemed to be owned by the absentee beneficiary at the general absentee owner rate of land tax. The general absentee owner rate for land with a taxable value of between $300,000 and $600,000 is $13,350 plus 4.3% of the amount over $300,000. The tax assessed is $13,350 + (($500,000 - $300,000) × 4.3%)). $13,350 + $8,600 = $21,950.
- Step 2: A deduction is applied to avoid double taxation, being the lesser of:
- Bill’s share of the trust land multiplied by the tax assessed on the trustee (excluding the absentee surcharge) i.e. 50% × $4,650 = $2,325 plus the taxable value of the trust land deemed to be owned by Bill multiplied by 4% (i.e. $500,000 × 4% = $20,000). $2,325 + $20,000 = $22,325, or
- Taxable value of the trust land deemed to be owned by Bill divided by the taxable value of all land owned by Bill multiplied by the tax assessed for Bill (i.e. $500,000 ÷ $500,000 × $21,950 = $21,950).
The lesser of the 2 calculations is $21,950.
The tax payable by Bill after applying the deduction (i.e. tax assessed $22,325 less deduction $21,950 = $375).
Ben’s land tax liability
The land tax assessed on Ben (as deemed owner) is calculated as follows:
- Step 1: Land tax is assessed on the trust land deemed to be owned by the beneficiary at the general rate of land tax. The general rate for land with a taxable value of between $300,000 and $600,000 is $1,350 plus 0.3% of the amount over $300,000. The tax assessed is $1,350 + (($500,000 - $300,000) × 0.3%)) = $1,950.
- Step 2: A deduction is applied to avoid double taxation, being the lesser of:
- Ben’s share of the trust land multiplied by the tax assessed on the trustee (excluding the absentee owner surcharge) (i.e. 50% × $4,650 = $2,325), or
- Taxable value of the trust land deemed to be owned by Bill divided by the taxable value of all land owned by Ben multiplied by the tax assessed for Bill (i.e. $500,000 ÷ $500,000 × $1,950 = $1,950).
The lesser of the 2 calculations is $1,950.
The tax payable by Ben after applying the deduction (i.e. tax assessed: $2,325 less deduction $1,950 = $375).
Tell us if you’re an absentee owner
If you are an absentee owner at 31 December, you must tell us before 15 January of the following year.
You will also need to provide a percentage of the taxable value of the trust land that is held by the absentee beneficiaries. This is calculated as a proportion of the total taxable value of land held for the absentee beneficiaries as a proportion of the total taxable value of land held for all beneficiaries of the fixed trust.
Example 3
Delta Pty Ltd is trustee of the Delta Trust, which is a fixed trust. The beneficiaries are Polly, Molly, Dolly and Holly who each hold an equal (25%) beneficial interest in the trust land. Polly and Holly are absentee individuals.
Delta Pty Ltd must notify us that the Delta Trust is an absentee trust and that the percentage of the taxable value of the trust land held by absentee persons is 50%.
Each beneficiary of a fixed trust who is an absentee person and has received their own land tax assessment must also make a separate notification.
Changes to your absentee owner status
Notify us of any change in your absentee owner status by updating your details through our Absentee Owner Notification Portal. You can do this at any time but if there is a change in status at 31 December, you must tell us before 15 January of the year after, using our portal. If you cannot access the portal, call us on 13 21 61.
