If you are an absentee owner, an absentee owner surcharge applies to taxable Victorian land you own. The surcharge is an additional amount that 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% from the 2020-2023 land tax years, 1.5% from the 2017-2019 land tax years and 0.5% for the 2016 land tax year).
An absentee owner includes the trustee of an absentee unit trust. If you are the trustee of an absentee unit trust that owns taxable land on 31 December, you must tell us that you are an absentee owner before 15 January of the following year. This is important because penalties may apply if you don’t tell us.
A unit trust is an absentee trust if at least one unitholder is an absentee person. The absentee unitholder can be a trustee of an absentee trust, an absentee corporation or an absentee individual.
Land tax for an absentee unit trust
The amount of land tax payable by a trustee of an absentee unit trust depends on whether the trustee has notified us of the unitholders or has nominated a principal place of residence (PPR) beneficiary.
Trustee has not notified us of the unitholders
Where no notification is made, the trustee of an absentee unit trust will be assessed for land tax at the:
- trust surcharge rates on the trust land, plus the
- absentee owner surcharge rates on the trust land multiplied by the proportion of units held by the absentee unitholders.
Example 1
Adam Pty Ltd is trustee of the Adam Unit Trust, which owns taxable land in Victoria. Adam Pty Ltd has not made a notification of the unitholders of the trust. Therefore, it will be liable to the trust surcharge rate of land tax.
The unitholders of the Adam Unit Trust are Jack and Jill, who each hold 50% of the units. Jack is an absentee person and therefore the Adam Unit Trust is an absentee trust. Neither Jack nor Jill owns other land.
Land tax liability for Adam Pty Ltd
In 2024, the taxable value of the land held under the Adam Unit Trust is $2,800,000 and the absentee owner surcharge is 4%. The land tax payable by Adam Pty Ltd 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 $2,800,000 is $29,435.
- Step 2: The proportion of units held by the absentee beneficiary (Jack) is multiplied by the absentee owner surcharge of 4%. As 50% of the units are held by Jack, the absentee owner surcharge assessed is $2,800,000 × 4% × 50% = $56,000.
The total land tax assessed for Adam Pty Ltd on the trust land is $29,435 + $56,000 = $85,435.
Trustee has notified us of the unitholders
Where a notification has been made, the trustee of an absentee unit trust will be assessed for land tax on the trust land as at the:
- general land tax rate on the trust land, plus the
- absentee owner surcharge rate on the trust land which is deemed to be owned by the absentee unitholders.
The unitholders which are absentee owners will pay land tax based on the absentee owner surcharge rates, while the unitholders that are not absentee owners will pay land tax based on the general rates. The unitholders will be entitled to a deduction for the tax that has been paid by the trust.
Example 2
Using the same details as the example above, except that Adam Pty Ltd had made a notification of the unitholders of the trust. Therefore, Jack and Jill are each deemed to be the owner of the trust land (in addition to the trustee) for land tax purposes in proportion to their unit holdings in the trust. That is, Jack and Jill are each deemed to be the owner of 50% of the trust land.
Land tax liability for Adam Pty Ltd
The land tax assessed for Adam 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 calculated at the general rate for land with a taxable value of $2,800,000 is $28,350.
- Step 2: The taxable value of the land that is deemed to be owned by the absentee unitholder (Jack) is multiplied by the absentee owner surcharge of 4%. As 50% of the trust land is deemed to be owned by Jack, the taxable value deemed to be owned by him is $1,400,000.
The absentee owner surcharge assessed is $1,400,000 × 4% = $56,000.
The total land tax assessed for Adam Pty Ltd on the trust land is $28,350 + $56,000 = $84,350.
Jack’s land tax liability
The land tax assessed on Jack (as deemed owner and absentee unitholder) is calculated as follows:
- Step 1: Land tax is assessed on the trust land deemed to be owned by the absentee unitholder at the general absentee owner rate of land tax. The general absentee owner rate for land with a taxable value of between $1,000,000 and $1,800,000 is $44,650 plus 4.9% of the amount over $1,000,000.
The tax assessed is $44,650 + (($1,400,000 - $1,000,000) × 4.9%) = $64,250.
- Step 2: A deduction is applied to avoid double taxation, being the lesser of:
- Jack's share of the trust land multiplied by the tax assessed on the trustee (excluding the absentee surcharge) (i.e. 50% × $28,350 = $14,175) plus the taxable value of the trust land deemed to be owned by Jack × 4% (i.e. $1,400,000 × 4% = $56,000), (i.e. $14,175 + $56,000 = $70,175), or
- The taxable value of the trust land deemed to be owned by Jack divided by the taxable value of all land owned by Jack multiplied by the tax assessed for Jack (i.e. $1,400,000 ÷ $1,400,000 × $64,250 = $64,250).
The lesser of the 2 calculations is $64,250. No tax is payable by Jack after applying the deduction (i.e. tax assessed $64,250 less deduction of $64,250 = $0).
Jill’s land tax liability
The land tax assessed on Jill (as deemed owner) is calculated as follows.
- Step 1: Land tax is assessed on the trust land deemed to be owned by the unitholder at the general rate of land tax. The general rate for land with a taxable value of between $1,000,000 and $1,800,000 is $4,650 plus 0.9% of the amount over $1,000,000. The tax assessed is $4,650 + (($1,400,000 - $1,000,000) × 0.9%)) = $8,250.
- Step 2: A deduction is applied to avoid double taxation, being the lesser of:
- Jill's share of the trust land multiplied by the tax assessed on the trustee (excluding the absentee owner surcharge) (i.e. 50% × $28,350 = $14,175), or
- The taxable value of the trust land deemed to be owned by Jill divided by the taxable value of all land owned by Jill multiplied by the tax assessed for Jill (i.e. $1,4000,000 ÷ $1,400,000 × $8,250 = $8,250)
The lesser of the 2 calculations is $8,250. No tax is payable by Jill after applying the deduction (i.e. tax assessed $8,250 less deduction $8,250 = $0).
Example 3
Beta Pty Ltd is trustee of the Beta Unit Trust, which has issued 100 units. The unitholders are Harry, who holds 25 units, Larry who holds 15 units, and Barry who holds 60 units. Harry and Larry are absentee individuals.
Beta Pty Ltd must notify us that the Beta Unit Trust is an absentee trust and that the percentage of the units held by absentee persons is 40%. Each unitholder of a unit trust who is an absentee person and has received their own land tax assessment must also make a separate notification.
Tell us if you are 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 units that are held by absentee unitholders. This is calculated as a proportion of the total number of units held by absentee unitholders as a proportion of the total number of units held by all unitholders of the unit trust.
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.
