The cost of owning property in Victoria: Absentee Owner Surcharge

In this informative article, we look at Absentee Owner Surcharge in Victoria.

 

Absentee Owner Surcharge

In certain circumstances, the Absentee Owner Surcharge is payable in addition to the Victorian vacant residential land tax, land tax and federal annual vacancy fee. The fee applies from 1 January 2017 to Victorian land owned by an absentee owner.

 

When is the surcharge payable?

The Absentee Owner Surcharge is payable by an ‘absentee individual’. An absentee individual can ne an individual (human), corporation or trust.

Absentee Individual Absentee Corporation Absentee Trust
An absentee individual is any individual who:

1.    Is not an Australian citizen or permanent resident;

2.    Does not live or reside in Australia; and

3.    Was absent from Australia:

a.    On 31 December of the year prior to the tax year, so for example, you were absent from Australia on 31 December 2017 and the tax year ends on 30 June 2018; or

b.    For more than 6 months in total in the calendar year before the tax year.

 

An absentee corporation is a corporation:

 

1.    That is incorporated outside Australia; or

2.    In which an absentee person/s has a controlling interest (i.e. holding more than 50 percent of shares in a corporation)

An absentee trust can be a discretionary trust, a unit trust or a fixed trust which has at least one beneficiary who is an absentee person.

There are different consequences for each type of trust.

Tax Rate Payable

The Absentee Owner Surcharge is an additional amount to other Victorian taxes which an owner may need to pay. The current rate is 1.5% of the general and trust surcharge rates, of the land tax payable of Victorian land owned by an absentee owner. If you pay land tax, then you may need to pay the Absentee Owner Surcharge.

 

What you need to do

If you are an absentee owner at 31 December of any given year, then the surcharge will apply. You must tell the State Revenue Office (SRO) before 15 January of the following year. So if you are an absentee owner as at 31 December 2018, then you must notify the SRO before 15 January 2019.

 

You can notify the SRO by using the SRO Absentee Owner Notification Portal. If you do not tell the SRO that you are an absentee owner before 15 January, then penalties may apply.

 

Example

Bart is a Canadian citizen who is not an Australian citizen and is not an Australian permanent resident. Bart lives in a house he owns in Northcote up until 1 May 2018. On 1 May 2018 Bart moves back to Canada.

Because Bart is not an Australian citizen and does not holds an Australian permanent residency visa. Bart stopped living in Australia on 1 May 2018 and will not return by 31 December 2018.

This means that Bart is an ‘absentee owner’ and must notify the SRO of his absence by 15 January 2019. Bart will also need to pay the surcharge.

 

Please see our COMPARISON-TABLE summary.

We invite you to contact us if you require further information and/or assistance with identifying and managing your obligations in relation to the cost of owning your property in Victoria.

 

Disclaimer: The information contained in this briefing is general in nature, not intended to be definitive, and does not take into account specific circumstances.

It is recommended that you seek appropriate legal advice as to the application of the taxes discussed in this briefing to your specific circumstances.