Land Tax Update - November 2022

Moores have just released their latest update on Land Tax which is sobering reading. Despite the assurance of the Victorian Treasurer, charities have been assessed for Land Tax due to hiring their facility for a children’s playgroup and ad-hoc hire by individuals and a community group. You can read more here.

Land Tax Update - October 2022

Many charities and sympathetic organisations have contacted the Victorian Treasurer, The Hon Tim Pallas MP, to express concerns regarding the negative impact of the Land Tax legislation on charities across Victoria.

A copy of the response from Mr Pallas to these concerns can be downloaded here.

However, the Treasurer’s letter, which seeks to give reassurances, contradicts the position of the State Revenue Office.

Northern Community Church of Christ has provided a media release which you can access here to assist in highlighting the confusion and call for change. Feel free to circulate this update among your charity network.

We welcome the commitment of the Liberals and Nationals to scrap the changes to the Land Tax Act, which you can access here.

Help change the Land Tax Act 2005

Land tax rules in Victoria are providing a disincentive to good management of property by charities. And it seems that some charities may be slugged with land tax for trying to be good stewards of their real estate.” (Moores Solicitors)

According to the current Land Tax Act 2005, for charitable institutions to be exempt from the land tax, they must exclusively use their property for charitable purposes. As quoted below:

Section 74 (1) (a) it is used and occupied by a charitable institution exclusively for charitable purposes; or
Section 74 (1) (b) (iii) declared by its owner to be held for future use and occupation by a charitable institution exclusively for charitable purposes; or

This is despite non-profit sporting, recreational or cultural land owners being provided with a more favourable position of ‘primarily’ rather than ‘exclusively’. This distinction affords an opportunity to a non-profit sporting club to occasionally hire out its facilities to other users. An organisation that is recognised as a charity is given no such opportunity – it may only protect its land tax exemption by using its property exclusively for charitable purposes.

The effect of this wording places the charity and the community they support at a significant disadvantage and disproportionally penalises charities in their efforts to steward their property for the benefit of the community.

For example, under the current wording of the Land Tax Act:
•      If a charity hires its facility to a community choir that is not registered as a charity, a single hire of $15.50 could result in the Victorian State Revenue Office charging the charity land tax of $925.00 on that space for the entire year.
•      Similar impacts could be felt by religious organisations hiring their facility to a funeral director for a person who is not a part of that local religious group.
•      Many start-ups or social enterprises look to charities for the use of areas which may be available from time to time at a low cost.
•      Grey areas also include hiring facilities for community forums, art classes, community dance groups, low-cost fitness or private tutoring and education classes etc. Unless the hirer is a registered charity, the hire could trigger the State Revenue Office charging the charity land tax due to the charity’s support of the community.

We believe the Land Tax – charity exemption LTA-009 ruling reinforces the disproportionate penalisation of charities as non-profits from other non-profits within the Act. A change to the ruling will not provide sufficient protection for charities.

Help change the Land Tax Act!

We have an opportunity to write to the Victorian Parliament to amend the Land Tax Act 2005 before the state election on 26 November 2022. But we need to move quickly!

If we do not get sufficient support to write letters and make calls before the State Election, we fear we will not have another opportunity for four more years. We will be stuck with the legislation as it currently stands, resulting in charities withdrawing their low-cost rent from community groups and individuals. Many of these groups will not afford commercial rent, resulting in a need to close or cease activity. With your support, we can change this future!

We can bring about change by calling or emailing your State Members in the Lower and Upper House and by writing to the State Treasurer, The Hon Tim Pallas MP. To know who your State MP’s are, please visit the Victorian Electoral Districts for the Legislative Assembly (Lower House), and the Victorian Electoral Districts for the Legislative Council (Upper House).

You can write your letter in your own words or personalise the template provided. Just remember, we want the reader to be on our side and support the change. When you write of call, please also include your best contact details and request that your MP contact you regarding what support they will provide.

General Information
Local MP Letter Template
The Hon Tim Pallas MP Letter Template
Victorian Charities Excel Spreadsheet Guide
Victorian Charities Excel Spreadsheet