Agri Business

Land Tax Exemptions – State Revenue Office

Land tax is a tax that is payable whilst the property is held by a person/ entity. Land tax is payable where the total taxable value of land in Victoria held by a person/ entity as at 31 December of each year is equal to or exceeds $250,000.00.  If the land is held by a trust, the threshold value of land is $25,000.00.  Exempt land is not included in the total value of land owned.

An exemption to land tax may be available for land or part of land that is used for primary production.

What is Primary Production?

Primary production is considered by the State Revenue Office to be land used for one or more of the following activities:

  • Cultivating crops for the purposes of selling the produce, including in a processed or converted state;
  • Maintaining animals or poultry for the purposes of selling them, their offspring or bodily produce;
  • Keeping bees for the purposes of selling their honey;
  • Commercial fishing, including preparing for such fishing or storing or preserving fish or fishing gear; or
  • Cultivating or propagating plants, seedlings, mushrooms or orchids for sale.

There must be an intention to sell the products resulting from the primary production activity therefore land will not be primary production for land tax purposes where maintaining animals or growing crops is for personal benefit only.

The primary production exemption is only available for land that is located wholly outside of greater Melbourne if it is used primarily for primary production, wholly or partly within greater Melbourne but not within an urban zone if it is used primarily for primary production, or wholly or partly within greater Melbourne and wholly or partly within an urban zone if it is used solely or primarily for the business of primary production.

A family farm may be able to save thousands on tax each year should they meet the requirements for the exemption to land tax for primary production.

What if part of the land is used primarily for primary production?

If the land as a whole is not used for primary production, a partial exemption may apply to part of the land, provided that it meets the Primary Production requirements.

What if you are intending to farm a property?

If you are intending to farm a property, you may be eligible for a concession on Land Tax. To be eligible for this exemption, you must satisfy certain conditions, and shall depend on the location of the land.  We can assist you in reviewing whether or not you would be eligible for this concession and can assist you further by drafting your application or liaising with the State Revenue Office in relation to your application.

If I choose to agist, shall I be eligible for the Primary Production Exemption?

Depending on the location of the land, land being used for the purposes of agistment, that is permitting another person to graze their animals, including livestock and horses, on your land for a fee, may be classified by the State Revenue Office as primary production for land tax exemption purposes.

Land used primarily for agistment purposes, which is either located outside greater Melbourne or inside greater Melbourne, but not within an urban zone, may meet the requirements for a land tax exemption on the basis of primary production. The qualifying requirement required by the State Revenue Office is to ascertain that the owner of the animals/livestock sells the animals/livestock or their offspring. It is important to note that land agisted for animals/livestock for recreational purposes only will not qualify for primary production purposes.

Objection to SRO decisions and assessments

Land tax assessment notices (“Notice”) are issued by the State Revenue Office (“SRO”) on an annual basis, to all entities (individuals and companies) that own property in Victoria as at 31 December 2020.

The Notice will set out the following:

1. The name of the entity to which the Notice has been issued (including whether it is issued to that entity in its capacity as a trustee);

2. The properties held by that entity as at 31 December of the preceding year, including any property of which that entity has an interest pursuant to a trust, or which is held jointly by that entity and another person;

3. Any exemptions or surcharges which are applicable;

4. The taxable value of each of the properties; and

5. An assessment of land tax owned by that entity for the calendar year.

Our lawyers have experience in working with farming families and enterprises to review and provide advice in relation to Notices, and where necessary object to or request corrections to Notices, to ensure that you are paying the correct land tax for your landholdings.

What should I be looking at when I receive my notice?

It is important to closely review any Notice you receive as soon as you receive it.  You should be looking to see if there are any errors or omissions on the Notice.

This may include things like:

1. Checking whether the ownership of the properties is correct.

A common mistake we see, where a property is a trust asset, is that the Notice does not show that the entity hold the property as trustee of a trust.  This indicates that the SRO has not been advised that the property is held by entity on trust or has made a mistake in their records.  This may mean that the entity is paying the incorrect amount of land tax on the properties it holds.

2. Checking to see that all properties held by the entity are shown on the Notice, and that no properties which have been disposed of remain on the Notice.

3. Check that the properties on the Notice have been correctly assessed.

For example, if there are properties which have been assessed as exempt because they are used substantially for primary production on your Notice, they should show as exempt.

4. Comparing the taxable value of the properties on the Notice to the taxable value of the properties in the preceding year.

If there has been a significant increase, you may need to query why, or request a review by the Valuer General.

We understand that often farming families have large amounts of landholdings and complex structures of farming and landholding entities and trusts in order to allow for multigenerational succession planning.  For this reason, it is very important that you review any Notices you receive carefully, or ask your legal advisor to do so, to ensure that you are paying the correct amount of land tax.

Why did I not received a Notice?

If you have not received a notice in respect of property you own in Victoria, it is likely that your property (or all the properties you own, if you have more than one) are assessed as exempt from land tax.

The most common reasons a property is exempt from land tax is because:

1. It is your principal place of residence; or

2. The property is used primary for primary production. Click here for more

What if there are errors in the Notice

If you think there is an error or omission in your Notice or you disagree with the assessment, you have 60 days from the date of receipt of your Notice to provide your objection to the Notice.

As such, it is important that if you think there may be errors or omissions in a Notice you receive you should take action as soon as possible.

Some errors are quick and easy to fix. If there is a property that should or should not be on your Notice, the provision of a notice confirming the acquisition or disposition of the property to the SRO can be enough to correct the error.

Some errors in Notices are not as easy to correct, particularly in relation to matters including:

1. Complex trust structures, where the SRO requires certain information to be provided to property assess land tax on the property held;

2. Situations where the SRO are incorrectly assessing a beneficiary of a trust for land tax on a property held by the trust; or

3. Where a property is not exempt from land tax, however you believe it should be (for example, because you are conducting primary production activities on the land, or you are preparing to do so.

Our lawyers have extensive experience dealing with the SRO in relation to objections to Notices in relation to these types of matters.  We understand what the practical requirements of the SRO are in relation to specific objections, and we can advise you what evidence you need to meet the requirements and make your objection.

What if I identify errors in my Notice after the 60 day period has already expired?

You still have an obligation to tell the SRO of any errors or omissions outside of the 60 day period, so they can be corrected.

You can still make an objection to a Notice outside of the 60 day prescribed period, however the Commissioner has discretion to accept or reject the out of time objection based on the individual circumstances of your application.  There are specific factors which the Commissioner considers relevant to granting an out of time objection and you must address these factors in making an application.

How can Coulter Legal assist?

Time is of the essence when making an objection to a land tax assessment notice.  In some cases, an application can be complex, requiring specific evidence to be lodged as part of the objection.

Our team of lawyers have extensive experience in reviewing land tax assessment notices and lodging objections for clients with the SRO.  If you have queries or concerns in relation to a land tax assessment notice you have received, get in touch to discuss how we can assist you.

Objecting to Land Tax assessment notices and Council Rates 

For some farmers, an annual Land Tax Assessment Notice or Council Rate Notice can be a daunting and a frustrating bill to receive.

Land Tax is calculated based on the total taxable value of a person’s land holdings. The total taxable value is the value determined by adding the relevant Site Value of each property that a person/entity owns.

The site value is determined from the annual valuation conducted by the Valuer General Victoria, being the government body responsible for annual land value assessments. These values are also used for the purposes of setting council rates and the fire services property levy and shall therefore be listed on the Council Rates notice for the respective property.

If you believe that the taxable value of your Property, as listed on your Land Tax assessment Notice or Council Rates Notice is too high, it is possible to lodge an objection against the taxable value of your Property.

How can Coulter Legal assist you?

A member of our Agribusiness Team can assist you by advising on your chances of success in objecting to your properties value as well as assist with preparing and lodging an objection with the State Revenue Office or relevant Municipal authority.

Voluntary disclosure

If you have discovered an error in your State based tax such as a concession applied to your stamp duty or land tax assessment that you were not entitled to, you are legislatively required to notify the State Revenue Office of the error or omission, particularly in circumstances where:-

  1. land in Victoria owned by you is not specified in the Notice of Assessment;
  2. any land specified in the Notice of Assessment is exempt land.

Often there are penalties and interest payable on tax errors if such errors are discovered by the State Revenue Office.

How can Coulter Legal assist?

Penalties and interest charges that would normally apply may be reduced in the instance that you make a voluntary disclosure to the State Revenue Office.

If you have discovered an error on your state based tax notice, contact a member of our Agribusiness team to obtain appropriate advice.

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