At first glance, a Victorian property-based fire
services levy that applies to all property owners, provides for
concessions for veterans and pensioners, positive initiatives for
farmers, and on which no stamp duty or GST is payable, appears to
be a fairer regime than the current insurance-based
However, the new levy could be much more costly for
owners of large commercial and industrial buildings, as well as for
tenants who are liable for outgoings under their
Based on the recommendation of the Victorian Bushfire Royal
Commission, a new Fire Services Property Levy (FSPL) has been
introduced in Victoria.
Effective 1 July 2013, it will replace the current regime, under
which consumers holding insurance policies against fire contribute
to the levy through their insurance premiums.
The FSPL aims to be fairer by requiring all property owners to
contribute, not just owners who take out insurance against
HOW AND WHEN WILL OWNERS CONTRIBUTE TO THE FSPL?
Property owners will pay a fixed charge of $100 for residential
properties or $200 for commercial or industrial properties, plus a
variable rate calculated on cents per $1,000 of a property's
capital improved value (CIV).
Different variable rates apply depending on whether the property
is located in a Metropolitan Fire Brigade (MFB) area or a Country
Fire Authority (CFA) area and depending on the type of property.
Some examples of the categories are shown in the following table
(other categories are residential, primary production and public
Variable rates for the 2013-14 financial
Type of property
MFB variable rate (cents per $1,000)
CFA variable rate (cents per $1,000)
Vacant land (excluding vacant residential land)
For example, the owner of a shopping centre having a CIV value
of $50 million located in Box Hill (a MFB area) would be liable to
pay $30,550.00 for the FSPL. If the same shopping centre were
located in Wodonga (a CFA area), the shopping centre owner would be
liable to pay $54,800.00 for the FSPL.
Fixed charges will be increased annually by CPI. The FSPL is
intended to be an ongoing levy.
The FSPL will be paid to a property owner's local council
and will appear on their council rates' notices, including how
the levy has been calculated.
Unlike the current insurance-based levy, there will be no stamp
duty or GST payable on the FSPL, which will benefit businesses and
non-residential property owners. Farmers with multiple properties
that operate as a single business will pay only one fixed
HOW WILL THE NEW LEVY AFFECT DIFFERENT TYPES OF PROPERTY
Households in metropolitan fire brigade areas will see their
contributions decrease under the new regime. On the flip side,
costs for commercial and industrial properties are likely to rise,
and in some cases, rise significantly.
The Property Council of Australia (PCA) is openly concerned
about how the FSPL is calculated, claiming the variable rate
calculation will result in large buildings being the most heavily
For instance, next financial year the variable rate for a
residential metropolitan property is 6.9 cents per $1,000 of the
property's capital improved value, as compared to 60.7 cents
per $1,000 for commercial metropolitan properties and 95 cents for
industrial metropolitan properties.
Tenants that are liable for statutory outgoings under their
leases will also be hit with higher costs. These tenants typically
pay either the full amount or a proportion of the local government
rates, taxes, charges and other levies relating to the property. As
the FSPL will be incorporated in council rates on an ongoing basis,
property owners will likely seek recovery of the FSPL from tenants
as part of their outgoings liability.
The PCA estimates that "tenants in Melbourne commercial
properties occupying between 7,120 square metres and 23,000 square
metres can expect increases between 74 and 139 per cent" in
their FSPL obligation.
Under the insurance-based levy, a tenant who was required to pay
non-statutory outgoings may have been required to pay the levy as
part of its payment for insurance premiums. However, this would
only have been payable where the landlord had taken out insurance
The PCA will continue to work with the State Government on
improving the FSPL regime.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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