By Jack Nevile and Anna-Nikol Vladimirova

The Victorian Government has expanded the Vacant Residential Land Tax to the entire state, and made some crucial changes. If you own vacant property, you need to act now.

A property is considered ‘vacant’ if it has not been lived in for six months by either:

• the owner (or an owner’s permitted resident) as a principal place of residence; or
• a person under a lease, or bona fide short-term letting arrangement.

It is not enough that the property was ‘available’ for occupation. A listing or available on AirBnB won’t pass the pub test. It must actually have been used and occupied for more than 6 months, which can be intermittently as long as it is 183 days throughout the year.

The tax is 1% of the capital improved value (CIV) of the property, found on your council rates notice. This tax is slightly different to traditional land tax as it uses the CIV and not the site value of the land. You must also pay standard land tax in addition to this tax.

It will increase to 2% in the second year if your property remains vacant, and 3% in the third, where it is capped. On a $2,000,000 property this will be $60,000 per year.

Previously, outer Melbourne and regional properties were exempt – no longer. The entire state is subject to the tax, effective from 1 January 2024. There is an exemption for holiday homes occupied by the owner for at least 4 weeks per year – the Commissioner must be satisfied your holiday home is genuinely for holidays. There is also a brief exemption for properties undergoing renovations.

I have vacant property – how can I avoid it?

• Rent out your property
• Sell your property
• Use it as a holiday home for at least 4 weeks per year, provided you genuinely can do so. You can’t live in Carlton and holiday in the CBD, for instance.

The purpose of this tax is to encourage homeowners to make use of their property in light of the ongoing housing crisis. So the best way to avoid it is to play ball.

If you’re a renter, this can be great news. More supply should come to the market (although a similar law was enacted in Canada a few years ago, and there weren’t many additional homes made available). You may know of a vacant property – why not ask the owner if you can move in? Surely some rent is better than a huge tax bill. One of our lawyers did just that, and has moved into a previously empty property, saving the owner a big tax bill and making it livable in the process.

But who will know?

If you own a vacant property, you are required to notify the SRO using the Notification Portal by 15 January. Failure to do so incurs substantial penalties.

Late disclosure is treated more favourably than being caught in an investigation. The following penalty taxes apply if you do not disclose promptly:

• 5% if you voluntarily notified late;
• 20% if you notify after an investigation commences; and
• 90% if the SRO believes you intentionally disregarded the law and hindered their investigation.

Helpful Tools:

• The SRO has an online tool to help determine whether the tax applies to you
• The Vacant land tax calculator to calculate the amount payable, if it does.

If your residential property has enjoyed a prolonged vacancy, the winds of change have arrived. Don’t wait until the taxman comes knocking to do something. If you have any questions, please feel free to contact our office.

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

If you’ve determined that establishing an enduring power is the right choice for you, the most critical decision lies in selecting the individual to entrust with this responsibility. It’s imperative that you have full confidence in the person you appoint, as they will wield considerable authority and access over your finances and assets, depending on the scope of decisions you authorize them to make. The role of an appointed decision-maker carries substantial power and comes with significant responsibilities. Your chosen decision-maker for financial matters must:

1. Act in your best interests and strive to protect and promote them.
2. Refrain from gaining personal profit from their appointment.
3. Avoid any conflicts of interest between their own interests and yours.
4. Conduct themselves with honesty, care, and diligence.
5. Keep your finances and assets separate from their own, except for jointly owned property.

It’s helpful to begin by identifying the qualities that matter most to you. Examples of important qualities for enduring powers regarding financial decisions include:

• Willingness to prioritize and act upon your wishes and preferences, rather than their own.
• Adequate skill and time commitment to fulfill the role effectively.
• Competence in managing finances and property.
• Ability to remain composed in challenging situations.
• Confidence to advocate on your behalf, including dealing with legal and governmental entities.
• Effective communication skills and conflict resolution abilities.
• Proximity to you for in-person assistance or readiness to manage responsibilities from a distance.
• Understanding and respect for your cultural background and community ties.
• Willingness to embrace the role’s full responsibilities.

Once you’ve determined the essential qualities, try to assess the individuals close to you objectively. Fulfilling all the obligations of an appointed decision-maker won’t always be straightforward, so consider who is best equipped to handle this responsibility. Remember, trust in the person or people you appoint is paramount.

When selecting a decision-maker, opt for someone who truly knows you, your values, and your desires. This could be a spouse, life partner, adult child, another family member, or a trusted friend.

Here are some actions to take:

• Consider all potential candidates, including trusted friends, siblings, grandchildren, nieces, and nephews. You’re not obligated to choose adult children or a partner.
• Assess who would make sound decisions during challenging times.
• Exercise caution when appointing individuals facing their own difficulties, such as financial problems or addiction.
• Avoid appointing someone solely for family harmony if it compromises the best interests of your long-term well-being. Addressing issues openly may lead to better outcomes.

Here are some things to avoid:

• Don’t appoint someone solely based on familial ties or seniority within the family.
• Don’t succumb to pressure when selecting a decision-maker. The choice is entirely yours.
• Seek assistance from relevant organizations if you feel pressured to make a decision.

If you’re unable to identify a suitable candidate you trust, consider appointing an independent decision-maker, such as a public or private trustee company, an accountant, or a lawyer. While independent decision-makers offer benefits like regulation, insurance, and experienced staff, they typically charge fees for their services. Be sure to inquire about these fees before making a decision.

Furthermore, remember that an independent decision-maker may lack the intimate knowledge of your values and preferences that a family member or community member possesses.

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 Linnea Cederberg

Celebrate Lunar New Year
Lunar New year is fast approaching! Join the festivities and celebrate the Chinese Lunar New Year Dragon Festival in Chinatown on February 11th! You will be able to experience various markets, enjoy great food, art, music, and traditional lion dances to welcome the Year of the Dragon. More info can be found here.

Connection at the Lume
Step into a breathtaking world of radiant colours and mesmerising projections at The Luminous Lume’s dazzling digital art exhibition, Connection. Closing February 4th, Connection unveils the world’s largest digital canvas, adorned with over 650 vibrant works by 110 First Nations’ artists. You will be able to witness Australia’s oldest stories come alive in a captivating tapestry of music and visuals. Book tickets here.

Night on the Reef at Sea Life
Dive into an enchanting underwater world after dark at SEA LIFE Melbourne’s brand-new Night on the Reef! This dazzling makeover unveils a 360-degree ocean wonderland teeming with vibrant fish, majestic sharks, and playful rays. Witness the ocean come alive under the moonlight as bioluminescent creatures’ glow and engaging talks unveil the secrets of coral reef ecosystems. Learn more and book tickets here.

(Information recieved by GoGet Australia).

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 Jeffrey Stone

A new three-tiered visa system is set to replace the Temporary Skills Shortage Subclass 482 visa

The ‘essential skills’ visa will target those earning under $70,000; the ‘core skills’ visa will cover the $70,000-$135,000 range; and the ‘specialist skills’ visa is proposed for those earning over $135,000 per year. The specialist skills visa pathway, with no occupational list, promises a swift processing turnaround of 7 days. Trades occupations, machinery operators, drivers, and labourers are to be excluded from this category, which will have an annual allocation of 3,000 places.

The essential skills visa pathway details are pending finalisation.  These visas will be granted for up to 4 years and visa holders will have greater ability to change employers more easily. These temporary visas will provide clear pathways to permanent residency. The ‘Temporary Skilled Migration Income Threshold’ will be indexed annually, and a public register of employer sponsors created, to allow more ease with moving between employers.

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

Estate planning can be a minefield of confusing terminology, with the difference between mirror and mutual wills often misunderstood.

Mirror Wills, typically created by couples, mirror each other’s content, and can be altered or revoked by either will-maker at any time. Despite their reciprocal nature, they are distinct from Mutual Wills, which are legally binding and therefore harder to revoke. Mutual Wills involve an additional agreement between two individuals to create Wills on binding terms upon the surviving party, with equity imposing a trust.

Establishing the existence of Mutual Wills requires proving key elements. Clear evidence of an agreement among the parties is essential, along with specific terms indicating mutuality and irrevocability. The intention to create a legally binding contract through the executed Wills is crucial.

While oral agreements may be acceptable, the Courts emphasise the difficulty of proving the same, especially without the provision of a written contract.

While the final decision was handed down in 1937, the case of Birmingham v Renfrew remains particularly relevant when summarising the key aspects of Mutual Will agreements, including:

1. Two parties can create a contract through making mutual Wills;
2. While both parties are alive, the contract can only be altered or revoked with notice to the other;
3. If the contract is broken without sufficient notice, either whilst both parties are alive or by the surviving party after the death of the first, this amounts to fraud;
4. On the death of the first party, the contract becomes binding and irrevocable;
5. The survivor is free to deal with the inherited assets on trust for the benefit of those named in the Will;
6. Those named in the Will become beneficiaries of a constructive trust pursuant to the terms of the Will, with the survivor acting as trustee for their benefit and the trust capital is what is left after the survivor has enjoyed it; and
7. Any transactions to defeat the intentions of the deceased party by the survivor will be in breach of that trust.

To avoid disputes relating to Mutual Wills, certain precautions are recommended:

1. Seek legal advice to ensure correct drafting and suitability to specific requirements.
2. Document the Mutual Will agreement thoroughly and execute them simultaneously, clearly reflecting the intent to create a binding contract.
3. Regularly review and discuss the terms to align with the parties’ wishes, formalising alterations with the agreement of all involved parties.
4. Consider the alternatives, like Testamentary Trusts, or other estate planning strategies which may be easier to amend in future.

Of course, despite both parties having the best intentions, disputes may still arise. If a party attempts to change a Will against a Mutual Will agreement, beneficiaries can seek court intervention to enforce the Mutual Will and protect their interests.

If you are interested in creating a Mutual Will, or you are concerned about the implications of the same, we strongly encourage contacting us at nevileco@nevile.com.au

*If you and your partner create mirror wills with the same lawyer, and then wish to alter it independently with this same lawyer again, they will likely request the consent of your partner before making any changes.

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 Jeff Stone and Linnea Cederberg

The Department of Home Affairs has announced that the proposed implementation date for changes to the Employer-Sponsored migration program is to be the 25^th November 2023.

The MIA has requested the Department of Home Affairs to confirm the changes that are expected to be implemented on that day, although, it is strongly expected to potentially include the end of the long-awaited pathway to permanent residencies for all Temporary Skill Shortage (TSS) visa holders, including those working occupations on the Short-Term Skilled Occupation list (SOL), after working just 2 years with their sponsors.

TSS visa holders are currently only able to stay in Australia for up to 2-4 years if they are working full-time for a sponsoring employer. Migrants are only able to obtain a TSS visa if there are labour shortages, where an Australian employer is needing to seek elsewhere for a skilled worker. Although the TSS visa also entails a family visa section, it is not always guaranteed, considering many people are not open to the idea of moving their entire family for only 2-4 years of a new life. Now that the idea of permanent residency may be introduced into the Employer-Sponsored migration program, Australia may no longer be facing labour shortages, since skilled-migrant workers may have the possibility of working and living in Australia permanently.

The SOL is a list that compromises the Australian occupations in demand, which are available for foreign skilled workers who are looking for both short-term and long-term jobs in Australia. All those who are lodging applications for the TSS visa will need to refer to the SOL to know which occupations are in demand, and whether they fit the required skills. The TSS visa is a great opportunity for those who wish to seek a new life in Australia, as well as experience the working conditions, however it could be greatly improved if the visa holders are able to be allowed permanent residency, after two years of working, since that would entitle them to many benefits.

According to the Department of Home Affairs, permanent residents are entitled to several privileges, which include the ability to:

1. Remain in Australia indefinitely

This would give migrants the peace of mind to know that they are able to stay, instead of knowing that they must leave at some point.

2. Work and study in Australia

Giving them the right to an education would mean allowing them to progress in Australian society, both financially and mentally, as they would now have the knowledge on how the Australian system functions.

3. Medicare

Allowing them to access the health-care systems without the financial burden of excessive medical costs.

4. Apply for bank loans

This would make them eligible for home-loans and ability to purchase property, which would really make them feel at home.

5. Sponsor eligible relatives for permanent residency

Potentially able to have family with them, so that they can continue to build their lives without feeling alone.

These reforms are a crucial part of the Government’s long-term strategy to enhance and fortify the skilled migration program. While these timelines are always subject to change, this announcement nevertheless signifies that positive changes are on the horizon.

(Received from Migration Institute of Australia).

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 and Linnea Cederberg

Land tax legislation is intensely complex and can pose challenges even for the most astute landowners. Given that land tax liability is contingent on the property’s occupation status as of the 31st of December each year, it is prudent to commence planning now to minimise any avoidable exposure.
The subsequent points highlight some of the areas of risk that we frequently observe impacting our private clients and their family homes.

Moving PPR House
One of the risks involved in moving house is that a land tax bill can be related to either your former residence or your new one.
Typically, the “principal place of residence” (PPR) exemption means most family homes are exempt from land tax. When a family relocates and there’s an overlap where both the old and new properties are in their names, the PPR exemption may cover both homes during this transitional period UNLESS:

• The owner earns income from either home while it’s not their primary residence (e.g., through short-term leasing).
• The old home remains unsold by the end of the assessment year for which the PPR exemption is granted.
• The owner doesn’t occupy the new home within 12 months of purchase and utilize the new land as their primary residence for at least six continuous months.

The key takeaway is to strive for selling your former home within the year and avoiding the introduction of tenants to mitigate these risks.
 
Vacant Residential Land Tax (VRLT)
The imposition of a VLRT bill is a potential risk if you own residential property that remains vacant for more than 6 months in a given year.
Introduced from January 1, 2018, VRLT is an annual tax specifically applicable to homes in inner and middle Melbourne that are vacant for over six months in a calendar year. The tax is substantial, amounting to 1 percent of the capital improved value (CIV) of the vacant property. For instance, a property with a CIV of $1 million would incur an annual tax of $10,000.
VRLT is applicable to land that is suitable for residential purposes, such as a home or an apartment. This can also extend to land where a residence is undergoing renovation or where a former residence has been demolished for the construction of a new one, depending on the duration of the renovation/construction process.
An existing residence is typically deemed vacant if, for more than six months in the previous calendar year, it has not been occupied by one of the following:

• The owner or the owner’s permitted occupier, utilizing it as their principal place of residence (PPR), or
• A person under a lease or short-term letting arrangement made in good faith.

It’s crucial to emphasize that merely having the property available for occupation, such as by listing it on a short-term rental website, is insufficient. The property must have actually been used and occupied for more than six months.
Taxpayers bear the responsibility of notifying the State Revenue Office (SRO) by January 15 each year if a property they own was vacant for more than 6 months in the preceding calendar year. Failure to provide this notification could result in significant interest and penalties in addition to a Vacant Residential Land Tax (VRLT) assessment.
There are limited exemptions available for certain scenarios, including holiday homes, properties that changed ownership during the year, properties that became residential property during the year, and properties used and occupied by the owner for work purposes. The eligibility for these exemptions is contingent on specific technical criteria, and whether they apply depends on the unique circumstances surrounding a particular property.

Absentee owner surcharge
This is a risk in which involves incurring extra land tax if you reside overseas and are not an Australian citizen or permanent resident.
An annual surcharge of 2% is applied on top of the regular land tax rates for land owned by an absentee individual, an absentee corporation, or a trustee of an absentee trust.
In simpler terms, this surcharge may apply if an individual owner, a director of a corporate owner, or a beneficiary of an owning trust meets the following criteria:

• They are not an Australian citizen or permanent resident.
• They do not ordinarily reside in Australia.
• They were absent from Australia on December 31 of the year preceding the relevant tax year, or for more than six months in total in the calendar year before the relevant tax year.

Landowners are obligated to notify the State Revenue Office (SRO) if they are an absentee owner. This notification must be made by January 15 of the relevant tax year, using the Absentee Owner Notification Portal on the SRO website.
When owners, directors, or beneficiaries are not Australian citizens or permanent residents, it’s essential to consider whether notification may be required under the absentee owner rules to avoid the imposition of additional land tax.

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 Alvin Lim and Anna-Nikol Vladimirova

When it comes to leasing, transparency and open communication between a landlord and tenant is paramount. Tenants rely on accurate information to make informed decisions about the premises they intend to lease. To safeguard this requirement for certainty, the Retail Leases Act 2003 (Vic) requires landlords to provide accurate disclosure statements to their tenants within 14 days before the execution of a lease agreement.  Failure to do so can have serious repercussions, potentially leading to the termination of the retail lease contract. As this article will later show, it is also crucial to obtain legal advice before entering into a retail lease in order to minimise the cost of potential disputes.

The Importance of Disclosure Statements

A disclosure statement is a document that is signed by the landlord or the landlord’s agent and must be provided to the tenant within 14 days before the execution of a lease agreement. By providing accurate and comprehensive information, landlords allow tenants to make decisions that align with their needs and expectations.

Common Elements of Disclosure Statements

1. Essential elements of lease terms and conditions

This section outlines the essential details of the lease, including the duration, rent amount, payment e payment schedule, and any specific conditions or restrictions.

2. Property Condition

Landlords are obligated to disclose any known defects or issues with the property. This could include structural problems, plumbing or electrical issues, or environmental hazards.

3. Maintenance and Repairs

Information about the responsibility for maintenance and repairs should be clearly outlined. This ensures that both parties are aware of their respective obligations.

4. Operating Costs and Additional Expenses:

Tenants need to know if there are additional costs beyond the base rent, such as utilities, property taxes, or maintenance fees.

5. Use Restrictions:

Some properties may have specific zoning or usage restrictions that tenants must adhere to. These should be explicitly stated in the disclosure statement.

Consequences of Inaccurate Disclosure Statements

In the case of Okil and Rajput v Lu and Turner Building Property [2019] VCAT 525 (‘Okil’), Senior Member L. Ford explained that a disclosure statement contains representations made by the landlord to the tenant. Where these representations are misleading or inaccurate, the landlord may be liable for misleading or deceptive conduct pursuant to section 18 of the Australian Consumer Law.

To demonstrate the importance of accuracy, consider an issue that arose in Okil. One of the sections of the disclosure statement requires the landlord to disclose to the tenant the existing structures, fixtures, plant and equipment in the premises that the landlord will provide with the lease. This section requires the landlord (or their agent) to tick a box next to the items which are included and strike through the items that are not included with the lease of the premises. In that case, the landlord’s agent had ticked some items, crossed out others, but left the box for a separate gas utility meter neither ticked nor crossed. The tenants viewed the disclosure statemen and presumed that the premises contained a separate gas meter. Unfortunately, they suffered financial loss when they discovered that this was not the case and were unable to commence operating their business until they arranged for such a meter to be installed. The issue was whether this unmarked item constituted a representation that the premises included a separate gas meter. The court held that, despite the fact that the disclosure statement was not filled out in the conventional way, the items which were neither crossed out nor ticked, constituted a representation that the item will be included with the premises.

In that case, the premises did not have a separate gas utility meter. This meant that the landlord’s disclosure statement was false and that the financial loss sustained by the tenants was recoverable.

This case not only highlights the importance of ensuring that the disclosure statement is accurate and true, but also the necessity of obtaining legal advice before executing lease agreements. This is because, the law provides that if a tenant realises that a disclosure statement is false, misleading or materially incomplete, he can issue a notice of termination within 28 days of entering into the lease. This means that the entire case of Okil could have been resolved in a much more efficient and effective manner, had both parties obtained legal advice. As Senior Member L. Ford stated:

It is very unfortunate that neither party appeared to obtain legal advice on their rights and obligations as landlords and tenants at the commencement of the lease or when issues arose during the lease. Had they done so the outcome of this matter is likely to have been very different… Both parties found themselves in difficult predicaments, the impact of which could have been significantly reduced had they received timely legal advice.

These wise words remain relevant to all commercial endeavours. At Nevile & Co. we are dedicated to protecting our client’s interests and minimising commercial risk. If you find yourself in the process of entering into a retail lease, contact us today to discuss your rights and obligations.

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

The new Victorian Premier, Jacinta Allan, has recently backed a proposed expansion to vacant residential land taxes.

During a Tuesday industry breakfast, the Victorian Treasurer, Tim Pallas,  revealed a plan to introduce legislation to parliament later in the week, aiming to extend the vacant residential land tax to cover the entire state starting on January 1, 2025. Currently, this tax applies only to empty residential properties in Melbourne’s inner and middle suburbs that have remained vacant for six months or more, with a rate of 1% of the property’s total value, including buildings.

Additionally, a new tax will be introduced in 2026 for vacant residential land that has shown no improvement for five years or more in established metropolitan areas of Melbourne.

The focus for these changes appears to be the importance of not allowing metropolitan Melbourne’s vacant land to remain idle year after year, with an emphasis on the belief that landowners should either develop their land or sell it to those who will. Pallas also asserted that the government’s land holdings would be held to the same standard.

It is expected that approximately 600-700 additional homes will be affected by the tax expansion, generating an annual revenue of around $6 million. Notably, single-family holiday homes will remain exempt from these changes, and Pallas characterized the measures as modest, designed to discourage long-term land banking.

Stay tuned for further updates as more information becomes available.

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.