Tuesday, 27 May 2025

Bills

State Taxation Acts Amendment Bill 2025

Statement of compatibility

Danny PEARSON (Essendon – Minister for Economic Growth and Jobs, Minister for Finance) (11:39): In accordance with the Charter of Human Rights and Responsibilities Act 2006, I table a statement of compatibility in relation to the State Taxation Acts Amendment Bill 2025:

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (Charter), I make this Statement of Compatibility with respect to the State Taxation Acts Amendment Bill 2025.

In my opinion, the State Taxation Acts Amendment Bill 2025 (Bill), as introduced to the Legislative Assembly, is compatible with the human rights as set out in the Charter. I base my opinion on the reasons outlined in this Statement.

Overview

The Bill makes a number of amendments to the Commercial and Industrial Property Tax Reform Act 2024 (CIPT Reform Act), the Duties Act 2000 (Duties Act), the First Home Owner Grant and Home Buyer Schemes Act 2000 (FHOGHBS Act), the Land Tax Act 2005 (Land Tax Act), the Payroll Tax Act 2007 (Payroll Tax Act), the Taxation Administration Act 1997 (TAA), the Unclaimed Money Act 2008 (UMA) and the Victorian Conservation Trust Act 1972.

Many provisions of the Bill do not engage the human rights listed in the Charter because they either do not affect natural persons, or they operate beneficially in relation to natural persons.

Human rights issues

The rights under the Charter that are relevant to the Bill are the right to property, the right to privacy and the right to protection from retrospective criminal laws.

Right to property: section 20

Section 20 of the Charter provides that a person must not be deprived of his or her property other than in accordance with law. This right is not limited where there is a law that authorises a deprivation of property, and that law is adequately accessible, clear and certain, and sufficiently precise to enable a person to regulate their conduct.

CIPT and Duties Acts amendments – commercial and industrial property

Clause 5 of the Bill amends the CIPT Reform Act to authorise the Commissioner of State Revenue (Commissioner) to determine whether land has a qualifying use to ensure that land that should be in the Commercial and Industrial Property Tax (CIPT) reform scheme but for lacking an Australian Valuation Property Classification Code (AVPCC) or for being valued more than 12 months prior to the transaction is appropriately assessed for the CIPT in accordance with the intended policy outcomes of the CIPT reform scheme. This may engage the right to property as natural person owners of land may become liable for CIPT as a result of the Commissioner’s provisional determination.

Clause 5 of the Bill also amends the CIPT Reform Act to authorise the Commissioner to assess or reassess CIPT or land transfer duty payable under the Duties Act when the Commissioner’s provisional determination is not consistent with the AVPCC allocated to the land in the subsequent valuation by the Valuer-General Victoria (VGV). This may engage the right to property as natural person owners of land may become liable to pay CIPT or duty as a result of the amendments.

Where only a partial interest in land has entered the CIPT reform scheme, duty consequences can apply to subsequent CIPT reform scheme transactions that occur within 3 years for the remaining interest in the land. Clauses 16 to 18 of the Bill amend the Duties Act to ensure that the same land transfer duty consequences will apply to CIPT reform scheme transactions involving child lots resulting from the subdivisions of this remaining interest in land. This may engage the right to property as natural person owners of land may become liable to pay duty as a result of the amendments.

However, to the extent that natural persons’ property rights are affected by these amendments to the CIPT Reform Act and Duties Act, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural persons to inform themselves of their legal obligations and to regulate their conduct accordingly. Furthermore, natural persons who are issued with assessments or reassessments as a result of the amendments will have the protections provided by the TAA including rights of objection, review, appeal and refund of overpaid tax.

Land Tax Act amendments – build to rent requirements

Clauses 29 and 30 of the Bill amend the Land Tax Act to specify that the rental requirement of build to rent (BTR) dwellings is that the property be ‘genuinely offered for rent’ rather than ‘available for rent’.

This may affect the right to property to the extent that natural person landowners of BTR developments may become ineligible for BTR land tax benefits if their BTR dwelling is only available for rent but not genuinely offered for rent.

However, to the extent that natural persons’ property rights are affected by the amendments, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural persons to inform themselves of their legal obligations and to regulate their conduct accordingly. Furthermore, natural persons who are issued with assessments or reassessments as a result of the amendments will have the protections provided by the TAA including rights of objection, review, appeal and refund of overpaid tax.

TAA amendments – 50% penalty tax rate for recklessness

Clause 35 of the Bill amends the TAA to introduce a new 50% base penalty tax rate targeting the behaviour of taxpayers and their representatives which amount to recklessness in relation to tax and/or notification defaults.

This may affect the right to property to the extent that natural person taxpayers who are reckless with respect to their state taxation obligations may be liable for increased rates of penalty tax. However, to the extent that natural persons’ property rights are affected by the amendments, any limit is in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and regulate their conduct in relation to tax and notification defaults accordingly. Further any deprivation of property as a result of these amendments is justified as the amendments are intended to deter non-compliance with Victorian taxation laws and promote voluntary compliance. Natural persons who are issued with assessments or reassessments as a result of the amendments will have the protections provided by the TAA including rights of objection, review, appeal and refund of overpaid tax.

UMA amendments – notices of repayment

Clause 40 of the Bill amends the UMA to empower the Registrar of Unclaimed Money (Registrar) to issue a notice of repayment of unclaimed money and impose interest on any unpaid amounts, when a payment of unclaimed money has been made to a person that the Registrar is no longer satisfied is the true owner of the unclaimed money. It also empowers the Registrar to recover unpaid amounts specified in the repayment notice as well as accrued interest on any unpaid amounts as a debt owed to the State of Victoria.

This may affect the right to property as natural persons who have received amounts of money from the Registrar to which they were not genuinely entitled may be liable to repay unclaimed money and interest on any unpaid amounts to the Registrar of unclaimed money. However, these amendments are in accordance with the law, which is clearly articulated, not arbitrary, and sufficiently precise to enable affected natural person taxpayers to inform themselves of their legal obligations and to regulate their conduct accordingly. Further, objection and appeal rights under the UMA will be available to these natural persons. Any deprivation of property as a result of these amendments is justifiable as the amendments are intended to help promote the policy objectives of the unclaimed money scheme which is to return amounts of unclaimed money only to genuine owners.

Right to privacy: section 13

Section 13(a) of the Charter provides that every person has the right to enjoy their private life, free from interference. This right applies to the collection of personal information by public authorities. Any unlawful or arbitrary interference with an individual’s privacy will limit this right.

Clause 25 of the Bill amends section 46K of the Land Tax Act to impose written notification requirements on a trustee where land held by the trustee for one trust is transferred to that same person acting as trustee for a different trust. It also imposes notification requirements on trustees that cease holding the trust land in their capacity as trustee and commence holding the land in their own right. These changes to the trust notification provisions are required to ensure that the appropriate rate of land tax is applied as a result of changes in trust land ownership.

Clause 30 of the Bill amends the Land Tax Act to impose the requirement upon the landowner of BTR dwellings to provide the Commissioner with a written declaration in relation to BTR dwelling rental periods upon request by the Commissioner. These declarations are required to ensure that only eligible properties are receiving BTR land tax concessions.

To the extent that the collection of any personal information from a natural person in relation to these provisions may result in interference with a natural person’s privacy, any such interference will be lawful and not arbitrary as these provisions do not require that a person’s personal information be published. Further, these provisions only require the provision of necessary information exclusively in the taxpayer’s possession to achieve the purpose of determining a person’s tax liability or eligibility for certain tax concessions. There are no other reasonable means available to achieve these purposes.

Retrospectivity: section 27

Section 27 of the Charter is concerned with the retrospective operation of criminal laws. It provides that a person has the right not to be prosecuted or punished for things that were not criminal offences at the time they were committed.

CIPT Act amendments – provisional determination of AVPCCs

Clause 5 of the Bill amends the CIPT Reform Act to authorise the Commissioner to determine whether land has a qualifying use to ensure that land that should be in the CIPT reform scheme but for lacking an AVPCC or for being valued more than 12 months prior to the transaction is appropriately assessed for the CIPT in accordance with the intended policy outcomes of the CIPT reform scheme. A provisional determination may be made in relation to land as at the date of a transaction that occurred before the commencement of the provision.

The provisions being inserted into the CIPT Reform Act do not amend any criminal laws and therefore section 27 of the Charter is not engaged. In any event, the Commissioner’s ability to make a provisional determination regarding land at the time of a transaction that occurred prior to the commencement of the provision is necessary to overcome the unintended outcome that land otherwise eligible to enter the CIPT reform has been excluded from doing so as no AVPCC was available at the time of the transaction.

Conclusion

For these reasons, in my opinion, the provisions of the Bill are compatible with the rights contained in sections 13, 20 and 27 of the Charter.

The Hon. Danny Pearson MP

Minister for Finance

Second reading

Danny PEARSON (Essendon – Minister for Economic Growth and Jobs, Minister for Finance) (11:39): I move:

That this bill be now read a second time.

I ask that my second-reading speech be incorporated into Hansard.

Incorporated speech as follows:

The Bill will deliver a key 2025–26 Budget measure. The Bill will also amend several state taxation laws to support fair and effective revenue management for all Victorians.

The Bill contains amendments to the Commercial and Industrial Property Tax Reform Act 2024 (CIPT Reform Act), Duties Act 2000, First Home Owner Grant and Home Buyer Schemes Act 2000, Land Tax Act 2005, Payroll Tax Act 2007, Taxation Administration Act 1997, Unclaimed Money Act 2008 and the Victorian Conservation Trust Act 1972.

Budget measures

Expansion of off-the-plan duty concession

As announced in the 2025–26 Budget, the eligibility period for the temporary off-the-plan land transfer duty concession for purchases of eligible apartments and townhouses will be extended for a further twelve 12 months to 21 October 2026. The concession was announced on 21 October 2024 and is available to off-the-plan purchasers of dwellings including apartments and townhouses. It reduces the amount of duty imposed on land transfers by allowing purchasers to exclude construction costs incurred on or after the contract date from the dutiable value of the land. The extension of the concession for a further twelve months will support homebuyers and the construction industry by encouraging more off-the-plan purchases of apartment and townhouses.

Family violence tax relief measures

The Bill amends the Land Tax Act 2005, the Duties Act 2000 and the First Home Owner Grant and Home Buyer Schemes Act 2000 to enable victim-survivors of family violence to access tax relief. Currently, victim-survivors of family violence are unable to access a land tax exemption when they leave their principal place of residence (PPR) due to family violence with no intention to return. Victim-survivors are also unable to access first home buyer benefits on the purchase of a new home where they’ve been part of an earlier application or because of their or their partner’s prior relevant interest in a property.

Consistent with its long-standing commitment to addressing family violence, until now the government has offered ex gratia tax relief to victim-survivors fleeing family violence. To give victim-survivors the certainty of legislative protection, the Bill amends the Land Tax Act 2005 to introduce an exemption from land tax for victim-survivors for up to 6 years where they have left their PPR due to family violence and have not received income from the land. The Bill also amends the Duties Act 2000 and the First Home Owner Grant and Home Buyer Schemes Act 2000 to allow victim-survivors to requalify for first home buyer benefits, subject to similar requirements. These measures take effect from the day after Royal Assent.

Build-to-Rent (BTR) amendments

The government is committed to ensuring that renters can access long-term housing. BTR developments offer long-term alternative housing options to home ownership for Victorians.

Under the Land Tax Act 2005, eligible BTR developments can receive a 50% reduction in the taxable value of land for land tax purposes and, where applicable, an exemption from the absentee owner surcharge for a period of up to 30 years (‘BTR benefits’). To reflect that these benefits should only be available to developers who genuinely offer long-term rental housing, the Bill amends the Land Tax Act 2005 to clarify that a minimum 3-year rental lease must be genuinely offered to a renter in a BTR development to obtain BTR benefits. To show that a lease term of at least 3 years was genuinely offered, the Bill requires the BTR provider and renter to jointly sign a declaration if the renter elects a lease term shorter than 3 years. The Bill also amends the Land Tax Act 2005 to prohibit rental terms of less than 12 months being used in eligible BTR developments, except in limited cases, such as the extension of a long-term lease. These amendments will apply to rental agreements that are signed on or after 1 January 2026 in recognition that some developers may need time to alter their practices.

Lastly, the Bill gives the Commissioner of State Revenue (Commissioner) the power to disregard periods where an eligible property is temporarily uninhabitable and it is reasonable to do so, when determining whether developments remain eligible for BTR benefits. A property may be temporarily uninhabitable due to unforeseen circumstances such as natural disasters or other reasonable circumstances such as planned refurbishments. In these circumstances, it is not fair that BTR developments lose access to BTR benefits because the property was temporarily unsuitable for occupancy.

Trust for Nature amendments

The Bill amends the VCTA to expand the Vacant Land Conservation Covenant Account (VLCCA) criteria to allow funds to be allocated to a broader range of conservation covenants across Victoria.

Under the VCTA, private landowners may enter into conservation covenants with the Trust for Nature (TfN) for land that the TfN considers to be ecologically significant, of natural

interest or beauty, of historic interest or of importance in relation to the conservation of wildlife or native plants. Land protected by a conservation covenant entered into with the TfN is exempt from land tax.

The VLCCA was established to support the Trust for Nature (TfN) conservation covenants on unimproved land within residential planning zones of metropolitan Melbourne. Initial funding of $2 million was allocated to the VLCCA to fund conservation covenants in respect of up to 50 properties in metropolitan Melbourne that may be impacted as part of the expansion of the Vacant Residential Land Tax to unimproved residential land in metropolitan Melbourne that has remained undeveloped for at least five years and is capable of residential development. Greater opportunities exist to protect Victoria’s unique biodiversity outside metropolitan Melbourne. The strict criteria for the use of the funds within the VLCCA has limited the use of the funds. The expanded criteria of the VLCCA will enable money standing to the credit of the VLCCA to be used in relation to land that contains a dwelling, land that has been zoned for non-residential purposes, or land in Victoria that is outside metropolitan Melbourne. The amendments are proposed to take effect from the day after Royal Assent.

Commercial and Industrial Property Tax (CIPT) Reform amendments

The Bill amends the CIPT Reform Act and Duties Act 2000 to enable the Commissioner to provisionally determine if land has a qualifying use where no Australian Valuation Property Classification Code (AVPCC) has been allocated to the land, and to request a valuation of any non-rateable non-leviable land from the Valuer-General Victoria (VGV) for the purposes of the CIPT Reform Act. Under the CIPT Reform Act, land qualifies to enter the CIPT Reform if it has been allocated a commercial or industrial-related AVPCC by the VGV under the annual valuation process. On occasions however, where land has not been valued by the VGV and therefore does not have an AVPCC allocated to it, a transaction of that land does not qualify to enter the CIPT Reform, regardless of whether the land is actually commercial or industrial land. The amendments will enable the Commissioner to provisionally determine if land has a qualifying use, ensuring that land that is otherwise eligible to enter the CIPT Reform is not excluded where no AVPCC is yet available.

The Bill also ensures duty under the Duties Act 2000 applies to the purchase of a child lot following a subdivision within three years after the parent lot enters the CIPT Reform as a partial transaction. This amendment aligns the dutiable treatment of a child lot with that of the parent lot after a subdivision.

These amendments will take effect from the day after Royal Assent.

Payroll tax amendments

The Bill amends the Payroll Tax Act 2007 to clarify the definition of regional employees. Since July 2017, regional employers have been entitled to a reduced rate of payroll tax in order to support businesses and employment growth in regional areas. Under the Payroll Tax Act 2007, a regional employee is defined as one who performs services ‘mainly in regional Victoria’. The Bill amends the Payroll Tax Act 2007 to clarify that only services performed in Victoria are considered in determining whether a person is a regional employee. This amendment ensures that regional employers whose employees sometimes work outside Victoria are not disadvantaged by the definition of a regional employee. These amendments will come into effect from 1 July 2025.

Other land tax amendments

The Bill amends the Land Tax Act 2005 to support families of landowners in difficult circumstances, where the landowner is unable to live independently or has passed away. The Land Tax Act 2005 currently provides that a PPR is exempt from land tax in limited concessionary circumstances where an owner no longer uses and occupies the land, including where they have lost the ability to live independently for an indefinite period, or where they have passed away and their estate is under administration. The exemption is only available if no income was derived from the land in the preceding tax year. If part of the land is being used to derive income from a substantial business activity or a separately rented residence such as a granny flat, the exemption does not apply, resulting in the land becoming fully taxable. The amendments remove this unfairness by allowing the exemptions for owners unable to live independently or who have passed away to apply to that part of the land used as the person’s residence. This means tax will only be assessed on the value of that portion of the land used to derive income from a substantial business activity or a separately rented residence.

Separately, the Bill amends the Land Tax Act 2005 to make certain notification obligations imposed on trustees operate more effectively, reducing red tape. Trustees will now only be required to notify the Commissioner of a disposal or acquisition of land where a trustee ceases holding trust land in their capacity as trustee and acquires that land in their own right or where a trustee ceases holding land subject to one trust and commences holding the same land subject to a second (different) trust.

These amendments will take effect from 1 January 2026.

Unclaimed money amendments

The Bill amends the Unclaimed Money Act 2008 to empower the Registrar of Unclaimed Money (the Registrar) to recover an amount of unclaimed money paid to a person who is not the owner by issuing a notice of repayment. The Bill also empowers the Registrar to pay an amount of unclaimed money to a subsequent genuine claimant, even if the entitlement has already been paid to an earlier claimant. The amendment to empower the Registrar to pay a subsequent claimant will take effect from the day after Royal Assent. The amendment empowering the Registrar to issue notices of repayment will commence in relation to amounts that were paid to a claimant on or after the day after the Bill receives Royal Assent.

Taxation Administration amendments

The Bill amends the Taxation Administration Act 1997 to introduce a 50% penalty tax for recklessness by a taxpayer or a person acting on their behalf in respect of the taxpayer’s obligations. Under the Taxation Administration Act, the Commissioner may impose penalty tax when a taxpayer does not comply with an obligation to pay tax or make certain notifications required under taxation legislation. The Act currently provides that the Commissioner may impose a 25% penalty tax, as the standard penalty rate, or a 75% penalty tax where a taxpayer shows intentional disregard of the law. This framework limits the Commissioner’s ability to respond proportionately to non-compliance across a range of severity. The Bill addresses this issue by introducing a 50% penalty tax for recklessness. The new penalty is modelled on the penalty tax framework under the Taxation Administration Act 1953 (Cth). The amendment will come into effect from the day after Royal Assent.

I commend the Bill to the house.

James NEWBURY (Brighton) (11:40): I move:

That debate be adjourned.

Motion agreed to and debate adjourned.

Ordered that debate be adjourned until tomorrow.