With the State Revenue Office actively auditing land tax assessments on properties that vest in a trust, it’s important to make sure you are paying the right amount.
Suppose you own or have previously purchased a property which vests in the name of a trust, such as a Self Managed Super Fund or Family Trust. This property is subject to land tax (e.g. commercial properties and residential investment properties). In that case, you need to be aware of the Trust surcharge.
The Trust surcharge is an additional amount added to your land tax assessment; and if it is evident that your trust is not identified on the assessment issued for land tax by the State Revenue Office you are obliged to correct this error by informing the State Revenue Office accordingly.
The State Revenue Office is now actively investigating for taxable properties that are held by trustees of trusts and when discovered trustee owners will be contacted by the SRO and asked to back pay-owed amounts for the years that the surcharge was not included plus interest and a penalty.
This is a serious matter, and the cost could be considerable – in some cases, it might even date back several years, which could mean a hefty bill for affected owners. It’s, therefore, essential to make sure you are paying the right amount of land tax surcharge.
If you need any further advice or have general concerns about the trust surcharge and land tax assessments, then seeking professional guidance is a must. It’s better to be safe than sorry about something as important as your property taxes.
At Tick Box Conveyancing, we are dedicated to providing you with the expert advice and support necessary to navigate the complexities of trust surcharges and land tax assessments.
Our team of experienced professionals is ready to assist you in understanding your obligations and ensuring compliance with all relevant regulations.
Don’t leave your property taxes to chance, reach out to Tick Box Conveyancing today for personalised guidance and peace of mind.
What Is The Land Tax Surcharge
Fixed, discretionary, or unit trust land is taxed at trust surcharge rates. The trust surcharge does not apply to administrative, excluded, inferred, or constructive trusts.
The trust surcharge is greater than regular land tax rates if the trust’s taxable land is worth $25,000 or more. When taxable land is worth $3,000,000 or more, general and trust surcharge land tax rates are the same.
How Are Taxes Calculated For Trusts
There are different land tax rules for different trust types:
- discretionary trusts
- unit trusts
- fixed trusts
- sub-trusts – when a beneficiary of a trust (first trust) is a trustee of another trust (second trust)
- deceased estates (including administration trusts)
- excluded trusts:
- charitable trusts
- concessional trusts established for a person who has a disability or is subject to a guardianship order
- public unit trust schemes
- wholesale unit trust schemes
- trusts holding land used by a club that is eligible for the concessional rate of land tax
- superannuation trusts of a complying superannuation fund
- implied or constructive trusts.
For more information, see the SRO’s Land Tax Trust Calculator page.
Notification Requirements For Trustees
All trustees must let the State Revenue Office know if they own land in Victoria and if they buy more land in Victoria as a trustee.
You must file a notice of acquisition with Land Use Victoria and a notice of trust acquisition of an interest in land form with the State Revenue Office within one month of buying land as a trustee. When the trustee buys more land for the trust, you have to file these notifications again.
The trustees must also write to the SRO within a month if:
- The kind of trust is different now (for example, from a discretionary trust to a fixed trust).
- When a notification of beneficial interest is in effect, there is a change in the beneficial interest(s) of a fixed trust.
- When a notification of unit holdings in the trust is in effect, there is a change of unit holdings in a unit trust.
- The named principal place of residence (PPR) beneficiary stops living on the trust land as their main home (PPR).
- Under the Taxation Administration Act of 1997, it is a notification default if you don’t notify the SRO within the one-month time limit. If this happens, you may have to pay a penalty tax on the extra amount that you would not have had to pay if you had told us the SRO about the problem on time.
For more information about the trust surcharge and land tax assessments contact Tick Box Conveyancing for general advice.