Our firm recently acted for a multinational airline group in successfully obtaining an exemption from the Victorian absentee owner surcharge under section 3BA of the Land Tax Act 2005 (Vic) in relation to a luxury hotel operating in Victoria.
The land was held through a unit trust structure with all unitholders comprising foreign-incorporated entities ultimately owned by the international airline group. On its face, the structure resulted in the landholding entity being classified as an absentee owner for the purposes of the Victorian land tax regime and therefore liable for the absentee owner surcharge.
The absentee owner surcharge currently applies at a rate of 4% of the taxable value of the land annually, resulting in a substantial ongoing tax exposure for foreign-owned landholding structures.
Our firm undertook extensive analysis of the exemption framework under section 3BA of the Land Tax Act, including detailed review of Government Gazette materials, the legislative framework and the policy intent underpinning the exemption provisions. Detailed submissions and supporting material were prepared demonstrating the client’s significant economic contribution to Victoria through the operation of the luxury hotel business, including its contribution to tourism, employment and broader economic activity within the State.
Following the application process, the State Revenue Office granted the exemption, resulting in substantial ongoing annual land tax savings for the client. The exemption will continue to apply unless there is a material change in circumstances.
This outcome highlights the importance of careful legal and strategic analysis when advising on complex foreign ownership and state taxation issues, particularly in circumstances where significant long-term tax liabilities may arise under the Victorian absentee owner surcharge regime.
Our firm regularly advises clients on Victorian land tax, absentee owner surcharge issues, exemption applications, trust structures and complex state taxation matters.
