The decision of Malcolm v Commissioner of State Revenue [2025] VCAT 218 has considered the operation of the joint owners of land provisions for Victorian land tax purposes and confirmed that where two taxpayers own multiple parcels of land together, the joint owned land will be aggregated and the progressive scale of land tax rates will be applied only once.
Legislation
Joint owners of taxable land are jointly assessed to land tax under subsection 38(2) of the Land Tax Act 2005 (Vic) as if it were owned by a single person.
Each joint owner is also separately assessed on its share of the land value together with any other land held individually, with a credit given for the corresponding share of land tax paid on the joint assessment.
Refer to our commentary on joint ownership here and aggregation here.
Background
Mr and Mrs Malcolm held two properties in Victoria as joint owners (which includes tenants in common as well as joint ownership). They received a 2023 land tax assessment which imposed land tax on both properties under the one assessment (i.e. they did not get the benefit of the threshold or in the progressive scale of land tax rates twice).
Mrs Malcolm also held other properties in Victoria and received an individual assessment together with a credit for her share of the land tax paid on the joint assessment.
The taxpayers objected on the basis that subsection 38(2) required separate assessments for each property – not a single assessment for all jointly held properties.
The taxpayers argued that if the properties were held individually as to 100%, the overall land tax would be lower as both properties would qualify for the tax-free threshold and shade-in rates.
It was also pointed out that if a single token share was given to a third party, the properties would be assessed separately and the overall land tax would again be substantially lower.
Decision
Upon review of the State Revenue Office’s decision to deny the objection, the decision of the single VCAT member, R Tang AM, Senior Member confirmed the single joint assessment as being in line with the legislation. It was noted that subsection 36(1) of the Land Tax Act 2005 (Vic) provided that:
Subject to this Act, a taxpayer is to be assessed for land tax on land for a tax year on the total taxable value of all taxable land of which the taxpayer was the owner at midnight on 31 December immediately preceding that tax year.
In light of that requirement for assessment on the “total taxable value of all taxable land”, the requirement under subsection 38(2) that “joint owners of taxable land are to be jointly assessed for land tax on the land as if it were owned by a single person” necessitated the outcome that a single assessment for all jointly held land was required.
Key Takeaways
The outcome of this decision is not remarkable given the legislation clearly works this way. Given that the application of land tax to joint owners for land is not well known however, it was also not surprising that the taxpayers were not happy with their corresponding land tax assessments.
With the recent lowering of land tax thresholds and the aggressive approach of the State Revenue Office we are seeing increasing number of taxpayers looking to challenge land tax assessments.
Land tax was often an afterthought when structuring land purchases, but it is now front of mind for many purchasers. Therefore, before purchasing properties within a family group, care should be taken to consider the land tax position when deciding the purchaser as an important factor so that there will not be surprises when the next land tax assessment is received.
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Please contact us for advice on land tax or any State Tax issues.
Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au
Nicholas Clifton
Principal Lawyer
T +61 3 9611 0154 | M +61 401 150 955
E nclifton@sladen.com.au
Meera Pillai
Associate
T +61 3 9611 0179
E mpillai@sladen.com.au
