ARTICLE · 02 MARCH 2006

Land Tax – Surcharge On Trusts

DLA Piper Australia

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The Victorian land tax treatment of properties held by trustees of trusts has changed.

AustraliaTax

Judith Earls

The Victorian land tax treatment of properties held by trustees of trusts has changed.

Subject to specified exclusions, properties held in all types of trusts will be subject to a surcharge of 0.375%. There are a number of specific requirements trustees must comply with and measures for reducing the impact of the surcharge.

Surcharge

Land held in a trust and with an aggregate unimproved value of more than $20,000 will be subject to a surcharge from the 2006 tax year. Land tax for the 2006 tax year is calculated on land holdings of a trustee as at midnight 31 December 2005. The basic surcharge is 0.375%. It is scaled back for unimproved land valued between $1.62M and $2.7M so that there is no surcharge for the proportion of unimproved land valued above $2.7M. A comparison between the land tax rates applicable to land not held in trust and land held in trust is set out in the table attached to this update. The following examples illustrate the impact of the surcharge.

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