Information Centre · Property & Conveyancing
Absentee owner surcharge in Victoria
A practical guide for Victorian property owners, investors, companies, trusts, executors, advisers and purchasers to the State Revenue Office's absentee owner surcharge — when it applies, who has to notify, and the risks of getting it wrong.
Key points
- The absentee owner surcharge is an additional Victorian land tax imposed under the Land Tax Act 2005 (Vic) on taxable land owned by an absentee owner at midnight on 31 December of the preceding year, administered by the State Revenue Office and added to the annual land tax assessment.
- The Act defines absentee individual, absentee corporation and absentee trust as separate concepts, each turning on the precise statutory wording (including citizenship, permanent residency and presence in Australia for individuals, controlling-interest tests for corporations, and specified beneficiary and unitholder tests for trusts) rather than any single loose factor.
- For discretionary trusts, the specified beneficiary concept under the Act is central; simply having an overseas relative in a broad discretionary class does not, of itself, make the trust an absentee trust — and fixed and unit trusts are analysed differently again.
- The rate has been 4% from the 2024 land tax year (2% for 2020–2023 and lower earlier), assessed on the taxable value of the owner's absentee-owner taxable landholdings; the ordinary land tax aggregation rules and any interaction with the trust surcharge or applicable exemptions must be worked out under the Act for the year.
- Absentee owners must notify the State Revenue Office through its absentee owner notification portal; the current deadline and mechanism for each land tax year and each status change should be confirmed against current SRO guidance rather than assumed.
- The absentee owner surcharge is separate from foreign purchaser additional duty under the Duties Act 2000 (Vic), ordinary land tax and any trust surcharge, VRLT, WGT, CGT and federal FIRB approvals; a single transaction can engage several of these regimes and each requires its own analysis.
Owning Victorian property can come with more than the general land tax most owners expect. Where the owner is an absentee individual, an absentee corporation or an absentee trust, an additional absentee owner surcharge can apply each year on top of land tax. The surcharge has been a feature of Victorian land tax for several years and was increased significantly from the 2024 land tax year.
This guide explains, in plain English, what the absentee owner surcharge is, who it can apply to, how it interacts with general land tax, the notification rules that catch many owners out, and the situations in which legal or tax advice is often essential. It is written for property owners, investors, executors and advisers — not as a substitute for advice on a specific transaction or assessment.
This article is general information only and is not legal, financial or tax advice. The State Revenue Office of Victoria (SRO) maintains the current Victorian Government guidance on the surcharge, including current rates and definitions. Always check the SRO website for current information before relying on any specific figure. If you are buying, selling or restructuring Victorian property, you can read more about how we help on our Conveyancing & Property and Commercial & Business Law pages.
What is the absentee owner surcharge?
The absentee owner surcharge is an additional amount of Victorian land tax that applies to taxable land held by certain absentee owners as at midnight on 31 December each year. It is assessed and collected by the SRO as part of the annual land tax assessment.
The surcharge is calculated on the taxable value of the land and is added on top of the general land tax and, in some cases, the separate trust surcharge that already applies to that land. It is not a stamp duty surcharge, and it is not the same as foreign purchaser additional duty (which is a separate, one-off duty payable when a foreign purchaser acquires residential property).
The legislative framework sits in the Land Tax Act 2005 (Vic) and related rulings. The SRO publishes detailed guidance on its website at sro.vic.gov.au/absentee-owner-surcharge covering the rules for absentee individuals, absentee corporations and absentee trusts, exemptions and the notification process.
Who may be an absentee owner?
The Land Tax Act 2005 (Vic) contains separate statutory definitions of an absentee individual, an absentee corporation and an absentee trust. Each is technical and should be checked against the current wording of the Act rather than paraphrased. In outline:
- Absentee individual — the Act defines this concept by reference to citizenship, permanent residency status and presence in Australia at, or during periods before, the relevant date. The precise wording of the definition in the current Act governs in every case, and a person who does not neatly fall within any one of those elements is not, on that basis alone, an absentee individual.
- Absentee corporation — broadly, a corporation incorporated outside Australia, or an Australian corporation in which one or more absentee persons hold a controlling interest as defined in the Act. Beneficial and indirect interests can be relevant on the Act's terms.
- Absentee trust — the Act treats discretionary trusts, fixed trusts and unit trusts separately. For a discretionary trust the concept of a "specified beneficiary" (as identified in the trust deed and required to be nominated for these purposes) is central: simply being a member of a broad discretionary class, or being a potential taker of a default distribution, is not, of itself, enough to make the trust an absentee trust. For fixed and unit trusts, the analysis turns on the identity of the fixed beneficiaries or unitholders. Current SRO guidance on how each type of trust is characterised should be checked in every case.
The definitions are technical, and small differences can change the answer. The SRO publishes online guidance and a self-assessment tool, but neither replaces tailored advice — especially where structures include companies, trusts, joint ownership or overseas connected parties.
How the surcharge interacts with Victorian land tax
The absentee owner surcharge does not replace land tax. It is imposed under the Land Tax Act 2005 (Vic) in addition to the ordinary land tax assessment. The ordinary land tax assessment (including how an owner's taxable landholdings are aggregated under the Act) governs how the underlying liability is worked out; the surcharge is added on top on the taxable value of the owner's absentee-owner taxable landholdings for the year.
Whether an ordinary land-tax threshold applies to the surcharge in a given case, and whether the trust surcharge is engaged in addition, turns on the Act and current SRO practice for the relevant year. Owners should not assume the surcharge is calculated purely parcel by parcel — aggregation and assessment rules can change the effective outcome.
Current rate and notification obligations
The absentee owner surcharge rate has been 4% from the 2024 land tax year. It was 2% from 2020 to 2023, and lower rates applied in earlier years. The current rate should always be confirmed on the SRO website before relying on it for a specific assessment year or transaction.
The Land Tax Act 2005 (Vic) and the Taxation Administration Act 1997 (Vic) impose notification obligations on absentee owners, and the SRO administers those obligations through its absentee owner notification portal. The precise deadline and mechanism for each land tax year and each status change should be confirmed against current SRO guidance, rather than assumed to follow a general continuing-update rule.
The notification obligation applies to individuals, corporations and trustees of trusts. Where an entity holds Victorian land and its underlying owners, unitholders or specified beneficiaries change, the trustee or corporate officers should consider whether absentee status has changed and whether a fresh notification is required under current SRO practice.
Exemptions and Commissioner discretions
The Act contains specific exemptions and Commissioner discretions for certain absentee corporations and absentee trusts, and interacts with existing land tax exemptions in appropriate cases (including the principal place of residence exemption under the Act, where its statutory conditions are met). Not every absentee owner can access a general PPR exemption, and whether any exemption or discretion is available in a given case depends on the statutory conditions and current SRO practice.
Situations in which the surcharge may need to be considered
The following are examples of situations in which careful analysis of the absentee owner surcharge is typically warranted; none is determinative on its own:
- Victorian land held by a foreign-incorporated company, or by an Australian company in which absentee persons may hold a controlling interest.
- A family discretionary trust where the trust deed's specified beneficiary treatment (as required under the Act) needs to be reviewed against the current class of takers.
- A unit trust or fixed trust holding Victorian real estate where the unitholders or fixed beneficiaries include non-residents.
- An individual owner whose citizenship, residency or presence in Australia at the relevant date may bring them within the statutory definition.
- A deceased estate holding Victorian real estate where the character of the estate or of any resulting trust under the Act needs to be assessed — the fact that a beneficiary lives overseas is not, on its own, determinative.
- A Victorian residential acquisition that may engage both FPAD under the Duties Act 2000 (Vic) and the absentee owner surcharge under the Land Tax Act 2005 (Vic) — with different tests and different assessment dates.
Distinct regimes: AOS, FPAD, VRLT, WGT, CGT and FIRB
The absentee owner surcharge (AOS) under the Land Tax Act 2005 (Vic) is separate from foreign purchaser additional duty (FPAD) under the Duties Act 2000 (Vic), ordinary land tax and any trust surcharge under the Land Tax Act, Vacant Residential Land Tax (VRLT), the Windfall Gains Tax (WGT), federal capital gains tax (including the foreign-resident CGT rules and any applicable withholding) and federal foreign-investment approvals under FIRB rules. A single transaction can engage several of these regimes. Neutral analysis of each, rather than reliance on a rule of thumb, is required.
Property purchases, ownership structures and estate issues
Decisions about how a property is purchased and held have direct consequences for the absentee owner surcharge. Holding the same property through an individual, a company, a discretionary trust, a unit trust or a self managed superannuation fund can produce different outcomes for duty, land tax, the absentee owner surcharge and capital gains tax.
For purchasers, the surcharge should be considered as part of pre-contract due diligence. Our practical guides on buying property in Victoria and selling property in Victoria cover the broader conveyancing process. For commercial premises, our article on when the Retail Leases Act applies in Victoria discusses related landlord/tenant exposure.
For deceased estates, executors should review the residency and citizenship status of beneficiaries before assets are distributed. Where overseas-based beneficiaries are involved, the estate or the receiving entity may become subject to the surcharge on Victorian real estate. Our articles on probate in Victoria and deeds of family arrangement and estate asset transfers cover related administration and restructuring options.
Risks of failing to notify or incorrectly assessing status
The SRO has wide powers to reassess prior land tax years where an owner has been incorrectly treated as a non-absentee. Common consequences of getting it wrong include:
- Reassessment of prior years — the SRO can issue amended assessments for past years adding the surcharge that should have applied.
- Interest — interest is typically charged on the unpaid amounts from the original due date.
- Penalty tax — penalty tax can be imposed in addition to interest, with the rate depending on whether the failure was inadvertent, careless or deliberate, and whether disclosure was made voluntarily.
- Cash-flow impact on settlement — reassessments can disrupt sale, refinance or restructure plans, particularly where land tax clearance certificates need to be obtained.
- Director and trustee exposure — for corporate and trust owners, decision-makers may face additional scrutiny about whether they took reasonable steps to identify and notify changes.
Voluntary disclosure before an SRO investigation usually attracts lower penalties than disclosure during or after an audit, and an early review with legal and tax advice can substantially reduce the overall cost.
When to seek legal or tax advice
The absentee owner surcharge is a good example of an area where legal and accounting advice often need to work together. Legal advice is typically important when:
- buying or selling Victorian property where any party, shareholder, beneficiary or trustee has an overseas connection;
- setting up or amending a trust deed or company constitution that will hold Victorian real estate;
- administering a deceased estate with overseas beneficiaries or overseas-resident trustees;
- responding to a notice, investigation or reassessment from the SRO; or
- considering whether to vary distributions, redirect entitlements or restructure ownership to address absentee status.
Accounting and tax advice is usually needed alongside legal advice — including on land tax modelling, the trust surcharge, GST, CGT and the interaction with foreign-resident withholding. Where the issue affects a business, our Commercial & Business Law team can help.
Practical checklist
A short, practical checklist for owners and advisers considering absentee owner exposure:
- Identify every entity that owns or will own Victorian real estate (individual, company, trust, SMSF).
- For each entity, map out the underlying owners, shareholders, unitholders, beneficiaries and trustees — including residency, citizenship and visa status.
- Check whether any of those persons would meet the SRO's definitions of absentee individual, absentee corporation or absentee trust.
- Confirm whether notification has been provided to the SRO and whether it is up to date.
- For purchases, factor the absentee owner surcharge into feasibility, cash-flow and structuring decisions.
- For estates, review beneficiary residency before assets are distributed.
- Where there has been a past failure to notify, consider voluntary disclosure with the support of legal and tax advisers.
Frequently Asked Questions
What is the absentee owner surcharge in Victoria?
The absentee owner surcharge is an additional Victorian land tax imposed under the Land Tax Act 2005 (Vic) on taxable land owned by an absentee owner at midnight on 31 December of the preceding year. It is administered by the State Revenue Office of Victoria (SRO) as part of the annual land tax assessment. Whether it applies, and at what value, depends on the statutory definitions and current SRO guidance and must be verified against the current legislation for each year.
Who is an absentee owner?
The Land Tax Act 2005 (Vic) defines three categories: an absentee individual, an absentee corporation and an absentee trust. An absentee individual is defined in the Act by reference to citizenship, permanent residency status and presence in Australia at, or during periods before, the relevant date. The statutory definition is technical and should be checked against the current Act rather than paraphrased.
How does the surcharge apply to trusts?
The Act treats discretionary trusts, fixed trusts and unit trusts differently. Depending on the type of trust, the analysis turns on concepts such as specified beneficiaries (for discretionary trusts) and the identity of unitholders or fixed beneficiaries. Being able to distribute to an overseas relative or adult child under a broad discretionary class is not, of itself, determinative — what matters is who is a specified beneficiary or the trust's classification under the Act. Current SRO guidance on absentee trusts should be checked in every case.
What is the surcharge rate and how is it assessed?
The rate is 4% from the 2024 land tax year (2% for 2020–2023, and lower rates in earlier years). The surcharge is assessed on the taxable value of the owner's taxable Victorian landholdings under the Land Tax Act 2005 (Vic); the ordinary land tax assessment (including aggregation of an owner's taxable landholdings) governs how liability is worked out, and the surcharge sits on top of that assessment. Whether an ordinary land-tax threshold or specific exemptions apply in a given case turns on the Act and current SRO practice.
Do absentee owners need to notify the State Revenue Office?
Yes. The SRO requires absentee owners to notify their status through its absentee owner notification portal, and to update the SRO where their status changes. The precise deadline and mechanism for each land tax year and each status change should be confirmed against current SRO guidance before relying on any general rule. Notification is separate from any objection or reassessment process.
Are there exemptions or Commissioner discretions?
The Act contains specific exemptions and Commissioner discretions for certain absentee corporations and absentee trusts, and interacts with existing land tax exemptions (including the principal place of residence exemption in appropriate cases). Not every absentee owner can access a general PPR exemption, and eligibility for any exemption depends on the statutory conditions and current SRO practice.
How does the surcharge apply to inherited property?
For a deceased estate, whether the surcharge applies depends on the character of the estate or trust holding the land under the Act, not on the mere fact that a beneficiary lives overseas. Executors administering Victorian real estate involving overseas beneficiaries should obtain advice on whether the estate or any resulting trust engages the absentee owner definitions before assets are distributed.
Is the surcharge the same as foreign purchaser additional duty (FPAD), VRLT, WGT or federal foreign-investment rules?
No. FPAD is a one-off stamp duty surcharge under the Duties Act 2000 (Vic). The absentee owner surcharge is an annual land-tax surcharge under the Land Tax Act 2005 (Vic). Vacant Residential Land Tax (VRLT), the Windfall Gains Tax (WGT) and CGT are separate regimes, and federal foreign-investment approvals under FIRB rules operate at the acquisition stage. A single transaction can engage several of these regimes.
What are the consequences of failing to notify?
The SRO can reassess earlier land tax years to include the surcharge under the Land Tax Act 2005 (Vic) and the Taxation Administration Act 1997 (Vic), and interest and penalty tax provisions in the Taxation Administration Act may apply. The applicable interest and penalty tax outcome depends on the facts (including whether the failure was inadvertent, careless or deliberate, and whether disclosure is voluntary) and current SRO practice.
Should I get legal or tax advice before buying, holding or transferring Victorian property?
Yes, particularly where any owner, shareholder, unitholder, beneficiary or trustee has an overseas connection. Legal advice usually needs to be combined with advice from your accountant on land tax, duty, CGT, foreign-resident withholding and structuring. This article is general information only and is not legal, financial or tax advice; users should confirm current requirements with the SRO or a professional adviser before acting.
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