The Land Tax Act 2005 (Vic) ("the Act") imposes land tax on all taxable land in Victoria, with the owner of the particular land liable to pay land tax on 31 December of each calendar year.
The rate of land tax is stipulated in Schedule 1 of the Act, with a person who is the owner of land as trustee of a trust liable for land tax at the surcharge rate set out in Part 3 of Schedule 1, where the taxable value of the land does not exceed $3 million.
Division 2A of Part 3 of the Act contains various concessions (if applicable) from the surcharge rate, where certain statutory pre-conditions are met.
Section 46F is one such section which provides for a concession from the surcharge rate for land held by a discretionary trust, if the trust property includes any pre-2006 land.
The statutory requirement stipulating the timing for the nomination of a beneficiary pursuant to this section is contained in sub-section (4)(b):
(b) to be lodged with the Commissioner on or before the later of—
(i) 30 June 2006; or
(ii) 3 months after the day on which a liability first arises for land tax on land subject to the trust.
The legislative requirement for the nomination to be lodged before 30 June 2006 is widely known, and discussed in Grove Auto Electrical Pty td as trustee for the R Foster Property Trust v Commissioner of State Revenue (Review and Regulation)  VCAT 505 at  – , and more recently in Polux Pty Ltd as trustee for Iatrou Business Trust No 2 v Commissioner of State Revenue (Review and Regulation)  VCAT 528 at  – .
However, it is often overlooked that nominations can still be put under section 46F for pre-2006 land in the following three limited circumstances:
- Liability to land tax first arises on land subject to the trust (eg. Where previously exempt agricultural land becomes re-zoned, or where the total value of land held by the trust now exceeds the trust threshold of $25,000). Note: The nomination in this instance must be put in within three (3) months of such a land tax liability first arising.
- The nominated beneficiary dies.
- The nominated beneficiary revokes the nomination.
It should be highlighted that section 46F(9) states that a nomination done due to the death of a nominated beneficiary or a nominated beneficiary revoking the nomination can be done on more than one occasion (as the case requires).
Also worthwhile noting is that should no nomination have been made before the deadline of 30 June 2006 for pre-2006 land held by a trust, if the beneficiary is using the land as their PPR, the trustee may nominate a PPR beneficiary for land used by that beneficiary as their PPR to obtain relief from land tax trust surcharge.
Our following article in this series looks at land held on trust and the circumstances where the nomination of PPR beneficiaries in the context of the various types of trusts provide relief from land tax trust surcharge.
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.