Land tax disputes: a guide for owners

Land tax is an annual tax based on the total taxable value of the landholdings of an owner. It is assessed on the unimproved site value of the land (unless the land is exempt from land tax).

As 2022 land tax assessments are received, it would be prudent for taxpayers to carefully review their assessment notices for any potential errors.

Taxpayers are generally obliged to notify the Commissioner of errors in their assessment notices (including errors that understate a person’s liability for land tax). 

Disputing an assessment

Where a taxpayer receives a land tax assessment that the taxpayer considers to be incorrect, the taxpayer may have scope to object to the assessment. Based on the Victorian State Revenue Office’s 2020-21 Annual Review data, over 59% of objections and over 40% of appeals received by the Victorian Revenue Office related to land tax assessments. This suggests that land tax is a significant area of dispute.  

Typical reasons a taxpayer may object to an assessment include:

• the land was sold before the liability date;
  
  
• the land is incorrectly described;
  
  
• the apportioned taxable value of the land is incorrect;
  
  
• the land is exempt land;
  
  
• the land has been assessed under the wrong owner;
  
  
• the owner’s proportionate interest is incorrectly described;
  
  
• the taxable value is higher than the ‘true’ site value; and
  
  
• the land is incorrectly treated as group property.

A taxpayer has 60 days from the date of service of the assessment in which to lodge a notice of objection. After this period, it would be necessary to seek the Commissioner’s approval, on a discretionary basis, to lodge an ‘out of time’ objection. It is therefore important that taxpayers not delay in seeking advice if dissatisfied with a land tax assessment notice. A successful objection should lead to a reassessment of the land tax liability.  

If the Commissioner disallows an objection, the taxpayer may engage in the appeal process and refer the matter to a tribunal or the courts. The Commissioner is required to behave as a model litigant in the conduct of litigation.  

Owners under investigation

A revenue office may, on occasion, investigate the land tax position of particular taxpayers.  

Factors which may lead to an investigation include:

• land (not being grouped land) is held by entities with common shareholders and directors;
  
  
• non-disclosure of trusts;
  
  
• public information and anonymous disclosures;
  
  
• conflicting information provided to different revenue lines within a state revenue office;
  
  
• conflicting information provided to the different revenue offices (federal, state and territory);
  
  
• mixed use and competing uses on the land;
  
  
• low utility usage;
  
  
• foreign residency;
  
  
• disclosures made on re-entry to Australia; and
  
  
• leasing information and bond data. 

It is not uncommon for a taxpayer to have incomplete records for the period under investigation for a range of reasons. However, if a revenue office commences an investigation into a taxpayer, the onus will be on the taxpayer to rebut any suspected non-compliance and the taxpayer’s ability to substantiate its position may be critical. 

Taxpayers should, if the need arises, seek advice in managing their land tax disputes.