Objecting to penalty tax on land tax assessments

LTX-02-20

Frequently asked questions

Annual land tax assessments are issued to owners of taxable land in Victoria, as at midnight on 31 December of the year preceding assessment.

Assessments are based on information from the land titles register, local governments and land owners themselves. However, sometimes this information is outdated or inaccurate and, as a result, you may be assessed for an incorrect amount of land tax.

You are obliged under the Land Tax Act 2005 to ensure your assessment is correct. This means that in certain circumstances, you must comply with your notification obligations by notifying us within a specified timeframe. If you do not notify us of the circumstances within the specified timeframe, a notification default occurs and penalty tax may apply.

Errors or omissions

You must notify us of errors or omissions in your assessment within 60 days of the assessment being issued, especially if:

land you own or jointly own in Victoria is not listed
land you own is incorrectly identified as exempt.

Land held on trust

If you are a trustee of land, you must notify us within one month of:

acquiring or disposing of land
the trust becoming a different category of trust
changes to the beneficial interests of land held under a fixed trust or to the unit holdings of a unit trust
the completion of administration of a deceased estate for which you hold land on trust
a nominated beneficiary of a unit or discretionary trust ceasing to use trust land as their principal place of residence.

Absentee owner

If you are an absentee owner of land at 31 December, you must notify us before 15 January of the following year as the absentee owner surcharge may apply.

Vacant residential land

If you own residential land within inner and middle Melbourne which has been unoccupied for a total of more than six months in a calendar year, you must notify us before 15 January of the following year as the vacant residential land tax may apply.

From 1 January 2025, VRLT will apply to residential land across all of Victoria if the land is vacant for more than 6 months in the preceding calendar year. This means that if you own residential land in Victoria that is vacant for more than 6 months in 2024, you must notify us before 15 January 2025.

Land exempt for construction or renovation of a principal place of residence (PPR)

If you own land that is exempt for construction or renovation of your PPR, you must notify us of the following:

If an occupancy permit or a certificate of final inspection is not required, you must notify us of the works finish date within 30 days after the completion of the construction or renovation.
If the construction or renovation is not completed within 4 years of commencement, you must notify us within 30 days after the 4-year period expiring.
If you do not move into the residence as your PPR by the qualifying occupation date, you must notify us within 30 days after the qualifying occupation date.
If you do not meet the residence requirement, you must notify us within 6 months + 30 days after the qualifying date.
If you intend to cease to be the owner of the property (e.g. by selling the property) before completing the construction or the minimum residence period, you must notify us at least 30 days before you cease to the be owner of the land.

For more information on the exemption, or details on the meaning of the works start date, works finish date, qualifying occupation date and residence requirement, visit Land tax – exemption for construction or renovation of a principal place of residence.

Why is penalty tax applied?

Penalty tax is a financial penalty applied for not meeting tax obligations. It is designed to encourage people to comply with all aspects of tax laws, including notifying us promptly about factors affecting their liabilities.

What is the standard rate of penalty tax?

The standard rate of penalty tax applied is 25% of the additional amount of tax that would have been assessed had you notified us within the specified timeframe.

When does a higher rate of penalty tax apply?

A penalty tax rate of up to 90% may apply in situations where you have intentionally disregarded your land tax obligations and/or have concealed information during an investigation by the State Revenue Office.

When does a lower rate of penalty tax apply?

The penalty tax rate may be reduced to:

5% if you voluntarily notify us after the specified timeframe but before we start investigating you, or
20% if you notify us after we start investigating you.

Penalty tax will not apply if you have notified us within the specified timeframes, or if we believe you have taken reasonable care to notify us, or if circumstances beyond your control have caused the notification default.

For further information on how the Commissioner applies penalty tax, please refer to Revenue Ruling TAA 007v5 – Interest and penalty tax.

Can I object to penalty tax?

If you believe you should not have been imposed penalty tax or the amount should have been lower, you have the right to lodge an objection.

You must lodge an objection within 60 days after receiving your assessment or reassessment, stating the circumstances and reasons that have prevented you from lodging your objection within the 60-day time period. You should also provide relevant supporting documents.

If you lodge your objection after the 60-day timeframe, you must provide reasons for the delay. If no reasons are provided to explain the delay, your objection will be invalid.

If your situation falls into one of the categories below, it is unlikely your objection will be successful:

If you did not know that you had an obligation to notify us. This is because the onus is on you take steps to comply with the law by being aware of your land tax obligations. Your notification obligation remains despite you being not aware of it.
If your notification failure was due to an oversight rather than a deliberate attempt to avoid land tax. This is because an unintentional tax default does not absolve you of your land tax obligations.
If you engaged an accountant or adviser to deal with your tax affairs, you were not told by them that you had to notify us and should not be penalised for the tax default that arises from their action (or inaction). This is because you are generally responsible for the actions of the representative you have authorised to act on your behalf in the conduct of your tax affairs.
If you voluntarily notified us before or during an investigation or assisted us during the course of the investigation and your penalty tax rate has already been reduced to reflect this. This is because your cooperation has already been taken into consideration with a reduced penalty rate rather than the standard 25%.
If you have always paid your land tax on time. This is because a good payment record does mitigate a notification default.
If you are experiencing financial difficulties or are unable to pay. This does not ordinarily justify a reduction of penalty tax or interest.

Even if you have lodged an objection, you must pay your liability in full by the due date or you may be charged late payment interest. If your objection is successful, we will refund any amount overpaid with interest.

What if I can’t pay the full amount by the due date?

If you will be unable to pay the full amount on your assessment by its due date, you can organise for the liability to be paid by instalments using our AutoPay service.

Revenue Ruling — interest and penalty tax

Read our comprehensive ruling on penalty tax and interest.