Commercial and Industrial Property Tax Reform

The Victorian Government will replace stamp duty on commercial and industrial properties with an alternative property tax. This reform, effective from 1 July 2024, is expected to remove upfront costs for approximately 265,000 properties, stimulating business growth and job creation.

What is the commercial and industrial property tax reform?

Commercial and industrial property tax reform means the implementation of changes in tax policies aimed specifically at commercial and industrial properties.

Who will this reform apply to?

This reform only applies to properties not primarily used for residential, primary production, community services, sport, heritage, or culture purposes, as well as specific transfers such as those from deceased estates or between spouses/partners. Moreover, commercial and industrial properties acquired before 1 July 2024 are exempt unless 50% or more of the property is transacted after this date.

How does a commercial or industrial property become subject to this tax reform?

Commercial or industrial properties become subject to the reform only if a sales contract is signed on or after 1 July 2024, transitioning from stamp duty to the alternative property tax at the point of sale. Properties already exempt from stamp duty, including those used for affordable housing or charitable activities, remain unaffected. Additionally, properties with mixed uses must primarily serve commercial or industrial purposes to qualify for the reform, except when distinct uses are on separate land titles, ensuring clarity and fairness in its application.

How is the tax calculated for commercial and industrial properties under this reform?

The Commercial and Industrial Property Tax will be set at one percent of the property’s unimproved land value, with exemptions and concessions available. The tax will commence 10 years after the first eligible transaction on or after 1 July 2024, and it will be assessed against the property owner as of midnight on 31 December preceding the tax year, akin to land tax. It applies only to properties that have entered the reform and ceases if the property’s use changes to non-commercial or non-industrial.

What exemptions and concessions carry over into the reform?

Existing concessions and exemptions for stamp duty on commercial and industrial property will persist when the reform begins. Properties with stamp duty exemptions won’t be part of the reform, but subsequent transactions liable for stamp duty will enter and pay the final stamp duty. Qualifying properties eligible for the Regional Commercial and Industrial Duty Concession will enter the reform and still receive a 50 percent reduction on their final stamp duty payment. Furthermore, existing land tax exemptions will extend to the Commercial and Industrial Property Tax.

More details about the commercial and industrial property tax reform
can be found on the government website.


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