By Morgan Collens

Starting November 18, Victorian families dealing with probate – the legal process of validating a deceased person’s Will – will face significant fee changes, with increases impacting estates valued at more than $250,000.00. The State Government, citing the need to cover rising Supreme Court costs, has increased the tiered fee system for probate. Critics argue the fee hikes are akin to “death tax by stealth”, imposing additional financial burdens on grieving families.

What are the Changes?

Under the new system, estates below $250,000 will now have their probate fees waived, providing some relief to smaller estates. However, for those with assets between $250,000 and $500,000, fees will jump from $68.60 to $514.40, marking an increase of 645%. Estates valued between $500,000 and $1 million will see a 180% increase, while fees for estates between $1 million and $2 million will rise by 250%.

New fee tiers have also been introduced for multimillion-dollar estates. For example;

• Estates between $2 million and $3 million will pay $4,801.00
• Estates valued between $3 million and $5 million will be charged $7,185.00
• Estates exceeding $7 million will incur a maximum probate fee of $16,803.00

The Government emphasizes that for most Victorians, whose estates are valued under $2 million, probate fees will remain lower than in comparable states like New South Wales and South Australia.

Government’s Justification

The State Government argues that these fee increases are essential to covering the cost of managing larger and often more complex estates, which can consume extensive court resources due to disputes over will validity, property rights, or disputes among beneficiaries. Acting Attorney-General Enver Erdogan pointed out that fees will now be capped at 0.24% of an estate’s value.

Erdogan also noted that less than 6% of Victorian estates are valued at more than $3 million, but these often require substantial court time and resources. “We’re making the system fairer by keeping probate fees for small to medium-sized estates lower than those in NSW and South Australia,” he said.

Concerns and Opposition

The opposition, however, strongly criticizes the timing and scale of these changes. Shadow Attorney-General Michael O’Brien contends that these fee hikes will place an unjust burden on grieving families, accusing the government of using a “death tax by stealth” to generate revenue. The increase, announced just before the Melbourne Cup public holiday, has also drawn scrutiny over limited public consultation and transparency.

Public feedback gathered by the Department of Justice and Community Safety showed widespread opposition to the changes, with 94% of respondents expressing concerns. Key worries included the affordability of probate, potential barriers to accessing the justice system, and the possibility that higher costs could open doors to elder financial abuse.

What This Means for Families

For families handling estates in the higher brackets, there could be unexpected expenses. Although the Department of Justice suggests options like securing loans or using law firms to temporarily cover probate fees, critics argue this is unrealistic and adds strain during an already difficult time.

Ultimately, these fee changes bring Victorian probate costs closer to those in other states, with officials maintaining that they are essential for sustaining the court system. Still, questions remain on whether these increases will truly improve access to justice or merely shift financial burdens onto families when they’re most vulnerable.

As the new probate fees come into effect, families navigating the probate process should review estate values carefully, consult with legal advisors, and consider any additional administrative costs involved.

Table of Updated Fees

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Jack Nevile

The year is almost at an end and the market entering what is usually its slower holiday period. But with property taxes levied on 1 January, including the increased land tax, the absentee owner tax, the vacant residential land tax, and the short stay levy, we may not see the same slowdown that we usually do – it can be quite expensive to wait until next year! If your property is on the market, calculate what taxes you’ll pay to hold it over Christmas – it might be cheaper to accept a slightly lower offer now, than a slightly higher offer in January. Since 1 January 2024, land taxes can no longer be passed on to purchasers.

To encourage new housing, the off-the-plan stamp duty concession has been extended to all buyers regardless of price or whether you’re an occupier/investor. It may mean a lot more townhouses in particular, which are usually priced above the old threshold. If you’re in the market for something off-the-plan, get in quick because this discount will only last for 12 months.

Changes to the Rental Tenancies Act have again been announced, protecting tenants and scrutinising landlords more closely. Lease breaking in particular will have financial penalties capped to 4 weeks’ rent, evidence will be required for any claims on the bond, rent-tech apps will no longer be able to charge tenants fees (long overdue, in my view) and when the draft legislation comes out, we’ll be having a close look to see what else they tuck in there.

Melbourne prices continue to lag and are now cheaper than every other capital except Darwin and Hobart. Sydney, previously flying high, has started to edge lower as well. If you owned a home worth $1m, here’s the dollar difference over the past 12 months:

(via @rabbit_wealth on Twitter)

Many wonder if the Americans, Kiwis and Canadians are cutting rates, why aren’t we? They’re cutting from 5.5%, whereas ours topped out at only 4.35%, still well below theirs. Australian inflation is expected to be second highest in the developed world in 2025. The bond market is having second thoughts about whether those cuts are really in the bag, with the 10-year yield going from 3.7% in September to 4.5% today.

Gross rental yields are about the same 4.5% level on units, with houses about 2.6% and presumably pricing in capital gain to make up the difference. While money in the bank doesn’t have outgoings, maintenance, rates, manager fees, or leaky taps, the number of properties on the market is basically unchanged over the past 6 years. So obviously there are a lot of owners receiving the rental yield and feeling pretty happy to sit tight.

General consensus, judging solely from the industry conferences we attend, is that Melbourne property is more affordable than in previous years, which is great news for young Victorians. The handouts and discounts the government is lavishing means that the lower end of the market hasn’t seen significant declines. Some of my clients are buying their landlord’s property because after factoring in the 25% the government will lend (interest free, in exchange for 25% equity), the mortgage payments are cheaper than rent!  Prices remain quite strong in the middle ring suburbs too.

Almost everybody who wants a job has one, and wages continue to be strong. The Queensland election has shown that handouts win votes, so expect some bread and circuses in 2025, with the Victorian election in 2026. With Melbourne comparably cheap to the rest of the country, immigration still on full throttle, and asset prices in general starting to take off, it would be a brave person who bet against the market in 2025. But then again, the Victorian Government might have a few more taxes up its sleeve, and the full effect of the already-legislated ones won’t appear on land tax bills until March. Time will tell!

If you’re looking at buying a property, selling a property, or anything in between, contact Jack Nevile at jack.nevile@nevile.com.au.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Morgan Collens

If you’re involved in a commercial leasing dispute and one of the parties resides interstate, you may be surprised to learn that the Victorian Civil and Administrative Tribunal (VCAT) cannot hear your case. This situation often leaves parties wondering why they must take their dispute to the Magistrates’ Court instead.

Here’s an explanation of why this occurs and what it means for your case.

VCAT’s Jurisdiction Limits

VCAT is a specialised tribunal that handles a wide range of civil disputes in Victoria, including retail and commercial leasing matters. However, its jurisdiction is limited by the Victorian Civil and Administrative Tribunal Act 1998.

Specifically, VCAT can only hear cases where all parties either reside or have their principal place of business in Victoria. This limitation exists because VCAT’s orders are not automatically enforceable in other Australian states or territories.

Why VCAT Cannot Hear Interstate Cases

The matter of Thurin v Krongold Constructions (Aust) Pty Ltd is instrumental in explaining why VCAT can’t handle interstate cases.

The Court of Appeal delivered this decision in 20 October 2022. It follows key rulings from the High Court in Burns v Corbett and Citta Hobart Pty Ltd v Cawthorn.

The decision confirms that VCAT cannot exercise federal jurisdiction in disputes because it is not considered a Chapter III Court under the Australian Constitution. In Victoria, the courts that fall under Chapter III include the Supreme Court, County Court, and Magistrates’ Court.

This means that VCAT cannot hear cases where a federal issue genuinely arises, which happens when the case requires the application or interpretation of federal law. A federal matter typically arises when one of the parties asks for the case to be decided under Commonwealth legislation (a federal law), rather than Victorian Law.

You can easily spot Commonwealth laws by the inclusion of ‘(Cth)’ at the end of the Act or Regulation title, while Victorian laws will have ‘(Vic)’ at the end.

For example: Insurance Contracts Act 1984 (Cth) (a federal law), Residential Tenancies Act 1997 (Vic) (a Victorian law).

The earlier case of Meringnage v Interstate Enterprises Pty Ltd was handed down by the Court of Appeal in February 2020, and confirmed the following:

1. VCAT cannot hear the parties are residents of different Australian states, or the Commonwealth of Australia is a party.

2. VCAT decides if the parties are residents of different states based on when the application is lodged, not when the dispute started and whether a party lives permanently in a state.

3. This decision does not affect a party who is identified as one of the following:

a. a corporation or State political entity

b. a resident of a territory (they are not a resident of a state)

c. an overseas resident.

The Role of the Magistrates’ Court

For interstate commercial leasing disputes, the Magistrates’ Court has the authority to hear and resolve cases where one party is outside Victoria. The court’s rulings are legally binding and enforceable across Australia.

This makes the Magistrates’ Court the appropriate forum for disputes involving parties from different states, providing a more streamlined and enforceable outcome for all involved.

What This Means for You

If you’re involved in a commercial leasing dispute where the landlord or tenant lives outside Victoria, your case must be filed in the Magistrates’ Court rather than VCAT. Although this may seem like an extra step, taking your case to the Magistrates’ Court ensures that any decision made is enforceable nationwide, providing a clear path to resolving the dispute.

In summary, while VCAT is a convenient and efficient venue for many local disputes, its jurisdiction is limited to cases where all parties are based in Victoria. When interstate parties are involved, the Magistrates’ Court is the proper forum to ensure that any rulings can be legally enforced across state lines, offering a fair and comprehensive resolution to your commercial leasing dispute.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Morgan Collens

When it comes to deceased estates, proper planning is crucial to prevent family conflicts and ensure that your final wishes are honoured. Without a well-structured estate plan, misunderstandings and disagreements over the distribution of assets can arise, leading to emotional and financial strain on loved ones.

Why Estate Planning Matters

Estate planning involves more than just writing a will. It includes naming executors, setting up trusts, and designating beneficiaries. When these elements are not clearly outlined, disputes can emerge over property, inheritance, or the responsibilities of managing the estate. In some cases, unresolved issues can lead to lengthy legal battles, draining the estate’s resources and harming family relationships.

Steps to Prevent Disputes

1. Create a Clear Will: Ensure your will is up-to-date, unambiguous, and legally valid. This helps prevent disputes over your intentions and how assets should be divided.

2. Appoint a Competent Executor: Choose someone trustworthy to manage your estate. A good executor will follow your wishes and handle the estate efficiently, reducing the chance of conflict.

3. Communicate with Loved Ones: Discuss your estate plan with family members to manage expectations and avoid surprises after your passing.

4. Consider a Family Trust: A trust can be a helpful tool in ensuring that assets are managed according to your wishes while potentially minimizing tax burdens.

The Role of Legal Advice

Seeking professional advice can help ensure your estate plan is comprehensive and legally sound. A lawyer can guide you through creating a will, establishing trusts, and naming power of attorneys or executors to make sure everything aligns with your intentions.

By taking the time to create a thorough estate plan, you can minimize the risk of family disputes and leave your loved ones with a sense of clarity and peace.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Meng Cheong & Albert Mu

Whether you are a consumer or represent a small business, or deal with consumers or small businesses, it is important to bear in mind that certain terms contained in the standard form contract to which you are a party can potentially be deemed unfair by a court under Section 23 of the Australian Consumer Law (‘ACL’).

One consequence of a term being held as unfair under the ACL is that the term is void, which means it cannot be enforced by a party. A court is empowered by Section 224 of the ACL to impose substantial fines on a person (including a company) who tries to rely on an unfair term within a standard-form consumer contract or small business contract, or enters into such types of contracts that contain an unfair term proposed by that person. Such fines are payable ‘to the Commonwealth, State or Territory, as the case may be’.

The ACL now defines a small business contract as one that ‘is for a supply of goods or services, or a sale or grant of an interest in land’ and, in addition, includes a party that is employing fewer than 100 people (when the contract is made), or has a relevant turnover of less than $10,000,000 in the last income year preceding the contract’s formation.

If a company contravenes a relevant unfair-term related provision under the ACL, the maximum amount of pecuniary penalty allowed to be potentially imposed on the company by the legislation is currently as high as the greater of:

• $50,000,000;
• Three times the value of the benefit derived from the relevant contravention (when such value can be determined by a court);
• 30% of the company’s ‘adjusted turnover during the breach turnover period’ for the relevant contravention (when value of the benefit derived cannot be determined).

Importantly, the significant amendments to ACL mentioned above will also apply to existing contracts that have been renewed on or after 9 November 2023 with respect to conduct occurring at or subsequent to the time of renewal. For existing contracts that have been varied on or after 9 November 2023, any terms so varied or added will be governed by those amendments as well.

Regarding the determination of fairness, Section 24(1) of the ACL stipulates that:

A term of a consumer contract or small business contract is unfair if:

 (a)  it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and

 (b)  it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and

 (c)  it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

A court is also required to take into account the contract as a whole as well as the degree of transparency of the disputed term when assessing fairness of terms within a consumer contract or small business contract.

If you are a consumer or small business owner concerned about potentially unfair terms affecting your interests, or if you represent a business that deal with small businesses or consumers and would like to minimize the risks associated with the contracts your business provides, please contact Nevile & Co today.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Morgan Collens

Planning for the future is crucial, especially when it comes to making decisions about your health and finances in the event of incapacity. Two key tools that help ensure your wishes are respected are Powers of Attorney and Advance Care Directives.

Powers of Attorney

An enduring power of attorney is a legal document that allows you to designate someone to make decisions on your behalf regarding personal matters (such as your living arrangements) and/or financial matters (such as managing bills). This designated person is referred to as your attorney. The “enduring” nature of this power means it remains in effect if you become unable to make decisions yourself.

• You have the option to limit the scope of the attorney’s authority to specific areas, and you can decide when their powers take effect.
• It’s important to note that your attorney cannot make medical treatment decisions for you unless they are also your designated medical treatment decision-maker.
• To create an enduring power of attorney, you must be at least 18 years old and capable of making informed decisions.
• Please remember, you can only create an enduring power of attorney for yourself, not for anyone else.

If you don’t appoint someone and are unable to make a decision when necessary, the Victorian Civil and Administrative Tribunal (VCAT) can assign a decision-maker for you, such as the Public Advocate or a trustee company.

Advance Care Directives

Creating an advance care directive is a way to plan for your future care in case you become unable to make decisions about your medical treatment.

An advance care directive is a legal document that allows you to:

• • Record your values and preferences for medical treatment (known as a values directive)
  • Make legally binding statements to health practitioners, specifying your consent to, or refusal of, certain future medical treatments (known as an instructional directive).

Caution: Only complete an instructional directive if you are certain about the medical treatments you want or don’t want in the future, as health practitioners are required to follow your instructions.

• An advance care directive is only used when you are no longer able to consent to or refuse medical treatment.
• Except in emergencies, health practitioners must obtain your consent before providing treatment.
• If you lose the ability to make medical treatment decisions, your health practitioner is required to make reasonable efforts to determine whether you have an advance care directive with relevant instructions. If such a directive exists, they will follow the instructions it contains.
• If you lack the capacity to make a medical treatment decision and have not created a relevant instructional directive, your health practitioner will consult your appointed medical treatment decision maker to make decisions on your behalf.
• The Medical Treatment Planning and Decisions Act outlines who qualifies as your medical treatment decision maker.

Your medical treatment decision maker is expected to make decisions based on what they reasonably believe you would choose. To do this, they must consider factors such as:

• • Your values directive (if applicable)
  • Any other values or preferences you have expressed.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Meng Cheong & Natalie Wang

Is Melbourne reducing the land tax threshold the only rule targeting property investors this time?

The Allan Labor Victorian government has made a big move, and this time the focus is on cracking down on short-term rentals. Not only might landlords need to be licensed, but they might also undergo an annual audit and pay a 7.5% short-term rental tax. This further squeezes landlord who are already dealing with high loan interest rates, potentially forcing them to sell their properties, increasing the housing supply, and putting downward pressure on property prices.

So, what exactly are the specific policies?

Currently, the second reading of the Short Stay Levy Bill 2024 (Vic) was moved on 28 August 2024 and is set to come into operation on 1 January 2025. The legislation introduces a 7.5% levy on short-stay accommodation bookings, including bookings made through platforms such as Airbnb and Stayz.

There are around 63,000¹ short-term rental properties in Victoria, with nearly half of these in regional Victoria. Almost 50,000 of those properties are entire homes that are not available for long-term rental.

The government aims to increase the compliance costs for short-term rental property investors and make Airbnb less profitable through taxation. This will pressure landlords to either abandon short-term rentals, switch to long-term rentals, or sell their properties to increase the availability of long-term rentals for local Australians, thus reducing the pressure on rising rents. The goal is to improve the lives of Melbourne residents, but for property investors, it could close off their income streams. The new rule has been announced as part of the landmark Housing Statement, the final policy has been informed by consultation with local councils, industry and tourism bodies to get the balance right for communities across Victoria.

The levy will not apply to a homeowner leasing out all or part of their principal place of residence for a short stay. When a homeowner goes on holiday and someone else stays there temporarily, the levy does not apply.

The government is also giving local communities the ability to respond to local concerns, with owners’ corporations now able to ban short stays in their developments if approved by 75 per cent of owners. Additionally, changes to the planning system will give local councils the power to regulate short-stay accommodation.

Another issue this may lead to is subleasing. If investors want to find an alternative to Airbnb, they might consider subleasing to maintain the relatively high rental income. While this may not be a concern for CBD apartments, it could be an issue for suburban houses. Owners will need to apply to the council if they are subleasing to more than three people, as this would classify the property as a ‘rooming house.’

Furthermore, we can speculate that along with the current trend, local governments may continue to squeeze the operating profit of short-term rentals and increase compliance costs. After the introduction of the licensing requirement, additional measures could follow, such as landlord training courses, commercial insurance, government inspections, etc.

Victoria property taxes today

Currently, Victoria has the highest property-related taxes in Australia. In 2023, the land tax threshold was lowered, resulting in higher taxes for property investors. This was followed by the foreign Absentee Owner Surcharge, and now, with this move targeting short-term rentals, property investors have more reasons to be concerned.

While there is no precedent in Australia, recent laws against Airbnb in New York have sparked some public discussions. The investment portfolio for real estate investors may need to be updated, with long-term capital gains and long-term rentals perhaps being more favourable in light of the new fiscal approach.

¹https://www.premier.vic.gov.au/more-long-term-rentals-and-more-social-homes

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Tracy Collins & Morgan Collens

Having a Will is essential for ensuring that your estate is distributed according to your wishes after your death. It is equally important to regularly update your Will to reflect any changes in your circumstances and/or intentions.

Legal Requirements for Updating a Will

Under the Wills Act 1997 (Vic), a Will can be altered through a codicil (a document that amends rather than replaces a previously executed Will) or by creating a new Will. Both methods require the same formalities as the original Will: the document must be in writing, signed by the person making the Will, and witnessed by two individuals who are not beneficiaries.

Life Changes Necessitating an Update

Several life events may necessitate updating your Will:

1. Marriage or Divorce: In Victoria, marriage revokes a Will unless it is made in contemplation of that marriage. Conversely, divorce does not automatically revoke a Will but can affect the distribution of your estate, particularly regarding any bequests to a former spouse.
2. Birth of Children or Grandchildren: The arrival of new family members is a significant reason to update your Will to ensure they are included as beneficiaries.
3. Significant Financial Changes: Acquiring or disposing of substantial assets should be reflected in your Will to ensure your current financial situation is accurately represented, particularly if you have gifted specific assets to specific beneficiaries.
4. Changes in Relationships: Alterations in your personal relationships, such as the dissolution of friendships or the death of a beneficiary, require corresponding adjustments in your Will.

Risks of an Outdated Will

Failing to update your Will can lead to unintended consequences, such as:

1. Disputes Among Beneficiaries: An outdated Will can lead to conflicts among beneficiaries, potentially resulting in costly legal disputes and strained family relationships.
2. Unintended Beneficiaries: Without updates, assets might go to individuals you no longer wish to benefit, while those you intend to provided for may be overlooked.

Practical Steps for Keeping your Will Updated

1. Regular Reviews: It is good practice to review your estate planning from time to time, particularly when your circumstances change. We recommend reviewing your documents every three years.
2. Clear Documentation: Keep a record of any amendments or new Wills, and inform your executor and close family members of the location of these documents.

If you are concerned about your estate planning arrangements, contact Nevile & Co today!

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.