The State Taxation Acts Amendment Act 2025 (Act) has been enacted in Victoria, following the State Taxation Acts Amendment Bill 2025 receiving Royal Assent on 24 June 2025.
The Act introduces various changes to Victorian tax laws, including:
- implementing the 2025-26 Budget measure extending the temporary off-the-plan concession;
- new tax relief measures for victim-survivors of family violence;
- clarification that a minimum three-year rental lease must be genuinely offered to a renter in a build-to-rent development;
- expanded land tax exemptions for the homes of owners who are deceased or in assisted living;
- new trustee notification requirements; and
- a new 50% penalty for reckless behaviour.
Extension of the temporary off-the-plan stamp duty concession to 20 October 2026
The Duties Act 2000 has been amended to extend the eligibility period for the temporary off-the-plan land duty concession, which was due to expire on 21 October 2025. This concession will now extend for a further 12 months and apply to contracts entered into before 21 October 2026.
The off-the-plan concession reduces the amount of stamp duty payable on a land acquisition by allowing purchasers to exclude construction costs incurred on or after the contract date from the dutiable value of land.
The temporary off-the-plan concession applies to purchases of apartments, townhouses and units within strata subdivisions that have common property. The concession extends to investors, companies and trusts, with no requirement for the purchaser to be eligible for either the principal place of residence (PPR) exemption or the first home buyer duty exemption or concession.
Family violence tax relief measures
Various amendments have been made to ensure that persons impacted by family violence can access tax relief measures, with effect from 25 June 2025.
First home owner benefits
Survivors of family violence may requalify for the first home buyer grant on the purchase of a new home, where they are unable to occupy their previous home due to family violence, and have not received a financial benefit from that property. This measure enables impacted individuals with the opportunity to purchase a new home as if they are a first home buyer.
Importantly, a person can only requalify for a first home buyer grant where they have received no financial benefit from owning the previous home, putting them in the same position as a first home buyer who has never owned a home. A ‘financial benefit’ includes rental income, and any financial payout from the dissolution of assets of a relationship where the property was taken into account as an asset.
Land tax relief
Survivors of family violence may be eligible for a land tax exemption for up to six years, where they are unable to occupy their PPR due to family violence, and they have not received income from the land.
Under this exemption, an individual’s home will continue to be treated as their PPR despite their absence if the Commissioner of State Revenue (Commissioner) is satisfied that their absence is due to family violence.
The State Revenue Office (SRO) advises that relevant evidentiary documents may include:
- details of any financial settlement for the breakdown of the relevant relationship;
- an affidavit or statutory declaration confirming relevant details; and
- other supporting information such as medical documents, court documents and police statements/reports.
Build-to-Rent (BTR) provisions
Amendments have been made to the BTR regime to ensure that BTR developments that are eligible for tax benefits, including land tax relief, promote long-term rental options. These amendments reflect the government’s intention that BTR developments should provide long-term stability for renters.
Minimum rental lease term
With effect from 1 January 2026:
- a minimum three-year rental lease must be genuinely offered to a renter in a BTR development, however, the renter may elect a shorter term; and
- if an agreement for a term of less than three years is entered into, the parties must jointly complete a declaration that a long-term rental option was genuinely offered, however a lesser term was entered into at the specific request of the tenant. This declaration must be provided to the Commissioner upon request.
These changes specifically require an owner of an eligible BTR development to genuinely offer residential rental agreements of not less than three years to a new renter. Previously, the legislation only required that such an agreement be available.
Additionally, residential rental agreements for terms of less than 12 months are no longer permitted, even if a prospective tenant has requested this. This restriction applies only to a new renter; it will remain permissible for the owner of a dwelling to enter into an agreement of less than 12 months with an existing tenant.
Dwellings temporarily unsuitable for occupancy
An ‘eligible BTR development’ is entitled to land tax concessions, subject to meeting various legislative requirements. One requirement is that the development must provide at least 50 self-contained dwellings.
The Act now provides the Commissioner with a discretion to allow taxpayers to continue to receive tax concessions, in circumstances where the 50-dwelling requirement is not satisfied where a dwelling is temporarily unsuitable for occupation. An example is where the dwelling is undergoing a brief refurbishment or has been damaged by fire. For a refurbishment to be considered reasonable, it should be planned to minimise the period for which the dwelling is not available to be rented, and the works should be kept to a minimum. In contrast, significant renovations that result in a development not being available for rent for an extended period are unlikely to be considered reasonable.
Landowners who are accessing the BTR concessions should consider the new requirements and ensure that three-year rental leases are genuinely offered to new tenants from 1 January 2026.
Commercial and Industrial Property Tax (CIPT) amendments
Amendments to the CIPT regime retrospectively empower the Commissioner to provisionally determine whether a property has a ‘qualifying use’ in cases where no Australian Valuation Property Classification Code (AVPCC) has been allocated to the land.
From 1 July 2024, land that qualifies for the CIPT regime will enter this regime upon the occurrence of an entry transaction (i.e. a dutiable sale), or an entry consolidation or entry subdivision. Land qualifies for the regime if it has a ‘qualifying use’. This will be the case if the land has been allocated an AVPCC in the ranges of 200 to 499 (commercial, industrial and extractive industries) or 600 to 699 (infrastructure and utilities land). Land that is used solely or primarily for eligible student accommodation also qualifies for the regime.
As a result of this amendment, land may be brought within the regime based on a determination by the Commissioner, despite the land not having an AVPCC within the above ranges. This may cause land to enter the regime despite the purchaser not having this intention, which may be problematic where there is a future change of use of the land.
From 25 June 2025, the CIPT provisions are also amended to ensure that duty payable on a property after subdivision (child lot) aligns with the treatment of the property before subdivision (parent lot).
Further detail regarding the CIPT regime is available here.
Land tax amendments – extension of PPR exemption and trustee notifications
With effect from 1 January 2026, the Land Tax Act 2005 has been amended to include the following changes.
Extension of PPR exemption
The PPR exemption has been extended so that it may partially apply to land when the owner is unable to live independently or passes away, in circumstances where part of the land is being used either to carry on a substantial business activity, or to provide accommodation in a separate residence.
In this case, the exemption can apply on a partial basis, in respect of the portion of the land that was used as a PPR. Land tax is only assessable on the part of the land that is not exempt land.
Trustee notification requirements
The Act clarifies that trustees are required to notify the Commissioner within one month of the following events:
- Where a trustee holds land for one trust, and the land is transferred to a different trust to be held by that same person as trustee.
- Where a trustee disposes of land directly to themselves to be held in any capacity other than as a trustee.
The amendments are intended to ensure the Commissioner is only notified when trust land is subject to a transfer that does not result in a change in legal ownership of the land, to enable land tax to be assessed correctly.
However, a failure to notify the Commissioner of the above matters constitutes a notification default, upon which the SRO can impose penalty tax and interest.
Payroll tax – regional employees
With effect from 1 July 2025, the Payroll Tax Act 2007 is amended to clarify the definition of ‘regional employee’ for the purposes of the regional payroll tax rate.
A lower payroll tax rate applies to taxable wages paid by regional employers. The regional employer rate of payroll tax is 1.2125%, compared to the standard rate of 4.85%. To obtain the lower rate, an employer must pay at least 85% of its Victorian taxable wages to ‘regional employees.’
The amendments clarify that an employee is a ‘regional employee’ if wages payable to the person for services performed in Victoria are for services performed mainly in regional Victoria. In determining this, it does not matter whether wages are payable for services in another Australian jurisdiction.
Previously, some regional Victorian businesses were not entitled to the lower payroll tax rate because their employees were performing services mainly in other jurisdictions and not mainly in regional Victoria.
Under the new definition, it is intended that only the time spent by the employee performing services for the employer in Victoria is to be taken into account in determining whether services are performed mainly in regional Victoria.
| Example of ‘regional employee’ – explanatory memorandum |
| If, during a month, an employee spent 60% of their time performing services in ACT, New South Wales and Queensland, 10% in Melbourne and 30% in regional Victoria, only the time spent performing services within Victoria is relevant in determining whether the employee is a regional employee and the time spent in other jurisdictions will be disregarded. This employee will be taken to perform 75% of services in regional Victoria (30% out of 40%). As a result, the employee is considered a regional employee. |
Penalties for reckless behaviour
The Act introduces a new 50% base rate of penalty tax for reckless behaviour in respect of tax defaults and notification defaults occurring from 25 June 2025.
Under the amendment, the Commissioner can increase penalty tax to 50% of a taxpayer’s tax shortfall or default, if satisfied that the shortfall or default (including notification default) was wholly or partly caused by recklessness of the taxpayer or their representative as to the operation of a taxation law.
Conclusion
The new 50% penalty for tax defaults and notification defaults is significant, and will apply across all notification obligations, including those required to be made under the land tax provisions, including the vacant residential land tax, and the absentee owner surcharge.
Taxpayers and their advisers should carefully review the notification obligations. It remains to be seen how broadly the SRO will seek to apply the 50% base penalty if it takes a wider view of what constitutes ‘recklessness.’
Contact us
Please contact Tamara Cardan on +61 3 9321 7862 if you would like to discuss any of the various new measures introduced via the Act.
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